Significance of a Test in the Context of Multiple Tests
Type I error occurs when we reject a true null hypothesis. Type I error is also referred to as a false positive result because the null is true, but it is rejected (the false positive). The expected part of a…
Decision Rules in Hypothesis Tests
The decision rule refers to the procedure followed by analysts and researchers when determining whether to reject or not to reject a null hypothesis. We use the phrase “not to reject” because it is considered statistically incorrect to “accept” a…
Test Statistic, Type I and Type II Errors, Power of a Test, and Significance Levels
A test statistic is a standardized value computed from sample information when testing hypotheses. It compares the given data with what an analyst would expect under a null hypothesis. As such, it is a major determinant of the decision to…
Interaction between Monetary and Fiscal Policies
Both monetary policy and fiscal policy can be utilized to influence the economy. These measures do not compete against each other. Instead, they complement each other. However, the impact of the two policies may vary or even cancel out each…
Expansionary and Contractionary Fiscal Policies
Fiscal policies are carried out by the legislative and sometimes, the executive branch of the government. The two main instruments of fiscal policy are taxes and government expenditure. The government amasses taxes to finance its expenditures. Therefore, fiscal policy can…
Implementing of Fiscal Policy
Fiscal policy refers to all the methods used by a government to influence the economy through tax rates and government expenditures. For example, a government may decide to reduce taxes. These moves should, in theory, stimulate the economy and thereby,…
Size of a National Debt Relative to GDP
The national debt is the total amount of money owed by the central government. It is important for a country to grow its economy and, at the same time, reduce its national debt. Many believe that government debt can cause…
Tools of Fiscal Policy
The government possesses two major fiscal tools for influencing the economy. These tools can be divided into spending tools and revenue tools. Spending tools refer to the overall government spending. On the other hand, revenue tools refer to taxes collected…
Fiscal Policy
Fiscal policy involves utilizing of government spending and altering tax revenue to influence a number of economic aspects such as the level of aggregate demand, the redistribution of income and wealth, and the allocation of resources. Roles and Objectives of…
