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1) Determine whether the following questions are true or false. a) Expansionary fiscal policy drives prices down in goods and loanable funds markets. b) In

1) Determine whether the following questions are true or false.

a) Expansionary fiscal policy drives prices down in goods and loanable funds markets.

b) "In the long run people come to expect whatever inflation rate the Fed chooses to produce, so GDP returns to its natural rate."

c) "When output rises, unemployment falls."

d) The Phillips Curve implies that policymakers face a tradeoff between increasing income and keeping inflation under control.

e) A central bank can attempt to supercede the business cycle by anchoring expectations through an inflation targeting policy.

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