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Under New Keynesian Theory,a Correctly Anticipated Decrease in Aggregate Demand

question 125

Multiple Choice

Under new Keynesian theory,a correctly anticipated decrease in aggregate demand will lead to __________ in Real GDP and __________ in the price level.


Definitions:

Null

Often refers to a hypothesis which assumes no significant difference or effect in a statistical analysis.

Alpha

In statistics, the threshold probability of wrongly rejecting the null hypothesis, typically set at 0.05.

T-statistic

A ratio computed from the observed sample mean difference divided by the standard error of the mean, used in hypothesis testing.

Critical Values

Critical values are thresholds in statistical hypothesis testing that define the boundary between the region where the null hypothesis is rejected and the region where it is not rejected.

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