An Increase in Financial Frictions Results in ________

question 55

Multiple Choice

An increase in financial frictions results in ________.

• A)an increase in the federal funds rate
• B)a reduced supply of credit to households and businesses
• C)a decrease in short-run aggregate supply
• D)an upward shift of the monetary policy curve

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Definitions:

T-statistic

A type of statistic used in hypothesis testing, calculated from sample data to determine whether to reject the null hypothesis.

Correlation Coefficient

The correlation coefficient is a statistical measure that calculates the strength and direction of a linear relationship between two variables.

Stepwise Regression

A method of regression analysis that involves automatic selection of independent variables to use in a model based on certain criteria.

Backward Elimination

A stepwise regression technique where all predictors are included in the model initially, and then the least significant predictor is removed step-by-step until the best model is identified.