Moving to the next question prevents changes to this answer. Question 4 Which statement is INCORRECT? An increase in potential output would allow macro-policy makers to set higher output and employment goals without risking an outburst of inflation. An adverse supply shock which increases core inflation can be ignored by macro-policy makers because it will create only a transitory increase in prices. A decrease in potential output would force macro-policy makers to set lower output and employment goals to avoid an increase in the inflation rate. A beneficial supply shock from a transitory fall in energy prices is unlikely to reduce the inflation rate over the long term. All the statements are correct. Moving to the next question prevents changes to this answer. MacBook Pro