If the Economy Is at Potential Output and the Fed

question 104

Multiple Choice

If the economy is at potential output and the Fed increases the money supply, in the SHORT run interest rates will likely:

• A)increase.
• B)decrease.
• C)remain constant.
• D)fluctuate randomly

---

Definitions:

Expected Frequency

The anticipated count in each category of a contingency table under the assumption that the null hypothesis is true, used in chi-square tests.

Null Hypothesis

The null hypothesis is a statement in statistical analysis that proposes no significant effect or no difference as the outcome of an experiment or study.

Level of Significance

The probability threshold under which the null hypothesis is rejected in hypothesis testing, denoted as alpha.

Null Hypothesis

A default position that there is no difference or effect in a particular situation, used as a starting point for statistical hypothesis testing.