Please answer 1 (c)

1. True, False, Uncertain (60 points) In each question, please select whether the state- ment is True, False or Uncertain. State the reasons to support your argument. (a) (10 points) True/False/Uncertain: In Friedman's Role of Monetary Policy paper, he claimed that monetary policy cannot be used to control interest rates and infla- tion. (b) (10 points) If taxes are thought of as being a reduction in income, then, using the principle of permanent income hypothesis, taxing labor income a lot but just once is better than taxing a small amount forever. (c) (10 points) According to Milton Friedman, when one factors in peoples expectation, then we will always have a constant level of output and higher price level, given that inflation is present and the central bank does not increase the money supply. (d) (15 points) Marginal labor income tax is bad (don't we all know that?). Hence. marginal consumption tax (at the same rate) is better. (e) (15 points) Let Country A be in a world with two goods: Good X and Good Y. If the price ratio of X to Y in Country A, px/pp, is lower than the price ratio of good X to Y in the world, py /py, then it must be that, with free trade, producers of Good X in Country A will be better off and consumers of Good X in Country A will be worse off