Label each of the following statements true, false, or uncertain. Explain briefly. a. The (I S) curve

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Label each of the following statements true, false, or uncertain. Explain briefly.

a. The \(I S\) curve shifts up with an increase in G, up with an increase in \(T\), and up with an increase in \(x\).

b. If \(\left(u-u_{n}ight)\) is greater than zero, then \(\left(Y-Y_{n}ight)\) is greater than zero.

c. If \(\left(u-u_{n}ight)\) is equal to zero, the output is at potential.

d. If \(\left(u-u_{n}ight)\) is less than zero, the output gap is negative.

e. If the output gap is positive, inflation is higher than expected inflation.

f. Okun's law says that if output growth increases by one percentage point, the rate of unemployment drops by one percentage point.

g. At the natural rate of unemployment, inflation is neither rising nor falling.

h. In a medium-run equilibrium, the rate of inflation is stable.

i. The central bank can always act to keep output equal to potential output.

j. It is easier for the central bank to keep output at potential output if expectations of inflation are anchored.

k. A large increase in the price of oil increases the natural rate of unemployment.

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Macroeconomics

ISBN: 9781292160504

7th Global Edition

Authors: Olivier J. Blanchard

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