Question: True or false with clear explanations (no graph needed). Need asap, thank you ! Consider a standard AD-AS model.The economy is affected by the following

True or false with clear explanations (no graph needed). Need asap, thank you !

  1. Consider a standard AD-AS model.The economy is affected by the following sequence of events. In period 1 there is a shock to the economy that is temporary. In period 2, the shock ends. But having observed an inflation outcome different to the inflation target, inflation expectations change from the inflation target to a value exactly equal to the observed inflation in period 1 (that is, expectations are not `anchored'). A temporary negative demand shock would lead to output below potential in period 1, but above potential in period 2. True or false?

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