Read the statements below carefully. Decide whether the underlined statement is true, false or uncertain and explain

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Question:

Read the statements below carefully. Decide whether the underlined statement is true, false or uncertain and explain the arguments for your answer. If any sentences appear before the bolded statement, it provides information to you about the scenario – it is true. If the answer you give is based on any assumptions, be sure to state them clearly.

a) Haiti’s economy is currently at a medium-run equilibrium when the Bank of the Republic of Haiti (Haiti’s central bank) decides to engage in monetary policy that will reduce inflation by 1 percentage point each year for a total of 6 years (from 15.5% to 9.5%); the inflation rate will then remain permanently at 9.5%. When the inflation rate fell from 15.5% to 14.5%, you notice that unemployment increased by 3 percentage points. True, False, or Uncertain: The Haitian economy will experience 24 point years of excess unemployment.

b) France’s economy is at a steady state equilibrium when the savings rate increases. True, False, or Uncertain: The transition from one steady state equilibrium to another will be characterized by a constant and positive growth rate of output.

c) Over 60% of Sierra Leone’s economy is in agriculture. For this reason, technological progress does not play a large role in economic growth; their economy does benefit from capital accumulation though. True, False, or Uncertain: Sustained economic growth is not possible for the Sierra Leonean economy.

d) On March 17, 2019, the Government of Canada released a new parental leave policy that will enable fathers to take an additional 5 weeks of parental leave. In other words, fathers who decide to take time off from work to care for the baby and apply for parental leave will get an extra 5 weeks of time off relative to the old policy. Consistent with economic analysis, we are holding all else constant: assume this policy has no impact on the mother’s decisions to return to work. There is already evidence that families are taking advantage of this new policy change. True, False, or Uncertain: The new parental leave for fathers will increase the Canadian unemployment rate and decrease the labor force participation rate.

e) According to 2018 data, Finland effectively had a 0% savings rate. True, False, or Uncertain: When capital per worker is no longer changing over time, the growth rate of output per worker in Finland is equal to zero.

f) Argentina is at a medium-run equilibrium, but the Central Bank of Argentina is not happy; they have the fifth highest inflation rate in the world. In February 2019, the inflation rate was 50.7%. True, False, or Uncertain: To decrease the inflation rate, the Argentinian economy must be willing to accept an unemployment rate that is temporarily higher than the natural rate of unemployment.