explain whether the following statements are true or false. use diagrams where appropriate

a. when current output rises above potential output, we hire fewer workers, which reduces the costs of production. the change in inflation will be negative

b. consider the US and mexico. both countries are identical , except that mexican firms are less responsive to interest changes than US firms. if the interest rate in each country were to rise by 2 percent, following the IS curve, the mexican economy would move further into recession than the US economy