In the Short Run,if Current Output Remains Persistently Above Potential

question 63

Multiple Choice

In the short run,if current output remains persistently above potential ________.

• A)inflation will rise causing a movement along the aggregate supply curve
• B)expected inflation will rise causing an upward shift of the aggregate supply curve
• C)the aggregate supply curve will shift until current output returns to its potential level
• D)all of the above
• E)none of the above

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Definitions:

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, essentially the test's ability to detect an effect when there is one.

Null Hypothesis

A hypothesis used in statistical testing that assumes there is no significant difference or effect and that the observed outcomes are due to chance.