When Potential Output Is Less Than Actual Aggregate Output

question 42

Multiple Choice

When potential output is less than actual aggregate output:

• A)the economy faces an inflationary gap.
• B)the SRAS curve intersects the AD curve to the left of the LRAS curve.
• C)the government should follow an expansionary policy to correct the problem.
• D)a decrease in taxes would solve the problem.

Understand and apply the concept of p-value in the context of hypothesis testing.

Formulate null and alternative hypotheses for tests concerning population proportions.

Identify the requirements for using the standard normal distribution in constructing confidence intervals and hypothesis tests for population proportions.

Incorporate the finite population correction factor where applicable in statistical tests and estimates.

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Definitions:

Relaxation Response

A physical state of deep rest that is the opposite of the stress response, which can be induced through practices like meditation, deep breathing, or yoga.

Feared Stimulus

An object, situation, or event that triggers a strong fear response in an individual, often leading to avoidant behavior.

Contingency Management

A behavior modification technique that reinforces desirable behaviors with rewards and sometimes punishes undesirable behaviors to promote behavior change.

Reciprocal Inhibition

A psychological principle that suggests the simultaneous activation of one psychological response can inhibit the occurrence of another incompatible response.