Suppose the AD Curve and the SRAS Curve Intersect to the Left

question 155

Multiple Choice

Suppose the AD curve and the SRAS curve intersect to the left of the LRAS curve.Which of the following is true?

• A) The economy is in a recessionary gap.
• B) The economy is in an inflationary gap.
• C) The economy is in a long-run equilibrium.
• D) This situation is actually impossible.

Understand and apply the concepts of marginal output and marginal cost in various business situations.

Graphically represent cost curves including AVC, ATC, and MC and interpret their relationships.

Understand the different scales of measurement and their characteristics.

Identify and apply the appropriate graphical representation for different types of data.

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Definitions:

Level of Significance

The probability of rejecting the null hypothesis in a statistical test when it is actually true; a measure of how unlikely results are due to chance.

Degrees of Freedom

The amount of free variables or measures that may change within an analysis while still adhering to all limitations.

T-statistic

A type of statistic used to estimate the significance of a difference between two sample means, given in terms of standard error.

Alpha

In statistical hypothesis testing, it represents the probability of committing a Type I error; the threshold significance level.