3. Beginning in long-run equilibrium with the central bank's inflation target being met, which of the following statements is false? (2 Points) The economy experiences a permanent adverse supply shock (such as an increase in oil prices). If the central bank wishes to maintain the pre-shock inflation target monetary policy will have to be tightened. With a permament positive supply shock it is possible for the economy to have lower inflation and lower real interest rates without the central bank changing its monetary policy, If the central bank fails to offset the effects of an adverse temporary supply shock (a temporary increase i the prices of raw materials for example) this will initially lead to higher inflation and real interest rates and lower ouptut and employment. Over time however, all these effects will be reversed without central bank intervention If the central bank loosens monetary policy it can largely offset the output effects of a temporary adverse supply shock while continuing to meet its pre-shock inflation target