The Inflation Rate Has Been Constant for Several Years at 4

question 286

Multiple Choice

The inflation rate has been constant for several years at 4 percent, and the unemployment rate has been stable at 6 percent over the same time period. Changes in government policy that cause the inflation rate to rise to 6 percent will

• A) have no effect on the unemployment rate.
• B) cause the unemployment rate to fall in the short run.
• C) cause the unemployment rate to rise to 9 percent in the short run.
• D) cause the unemployment rate to rise in the short run, but we cannot tell by how much.

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Definitions:

Test Statistic

A value calculated from sample data during hypothesis testing. It is used to determine whether to reject the null hypothesis.

Alternative Hypothesis

In hypothesis testing, the hypothesis that contradicts the null hypothesis, indicating there is an effect or a difference.

Test Statistic

An outcome obtained from samples in a hypothesis experiment, crucial in deciding if the null hypothesis should be dismissed.

P-value

Assuming the correctness of the null hypothesis, it is the possibility of obtaining test results that are equally or more extreme than those observed.