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1-) In the following question, you are asked to determine whether the statements are true or...

1-) In the following question, you are asked to determine whether the statements are true or false. Explain your reasoning to get full credit:

a) Natural level of unemployment cannot be changed through policy.

b) Assume velocity is constant. Suppose Fed keeps the money supply constant as well. Then, when the real GDP grows by 10 percent, prices should decrease by 10 percent.

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Answer #1

(a) False

(b) True

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