If the Short-Run IS-LM Equilibrium Occurs at a Level of Income

question 133

Multiple Choice

If the short-run IS-LM equilibrium occurs at a level of income above the natural level of output, in the long run the ______ will ______ in order to return output to the natural level.

• A) price level; increase
• B) interest rate; decrease
• C) money supply; increase
• D) consumption function; decrease

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Definitions:

Measure of Effect Size

A quantitative reflection of the magnitude of a difference or relationship, providing insight beyond simple significance tests.

Error Variance

Variability that cannot be explained or accounted for.

Statistical Power

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

Cohen's D

Estimate of the magnitude of the difference between the means of two groups measured in standard deviation units.