If the Real Value of an Item Bought Ten Years

question 168

Essay

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

---

Definitions:

Null Hypothesis

A statement of no effect or no difference, used as a default assumption until evidence indicates otherwise.

Test Statistic

A value calculated from a sample of data that is used to evaluate the validity of a hypothesis in statistical hypothesis testing.

α

Typically used to represent the significance level in hypothesis testing, which is the probability of rejecting the null hypothesis when it is actually true.

P-value

The probability of observing data at least as extreme as the observed data, assuming the null hypothesis is true.