Macroeconomics 5th Edition by Olivier Blanchard

Exercise 2

Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
a. The aggregate supply relation implies that an increase in output leads to an increase in the price level.
b. The natural level of output can be determined by looking solely at the aggregate supply relation.
c. The aggregate demand relation is downward sloping because at a higher price level, consumers wish to purchase fewer goods.
d. In the absence of changes in fiscal or monetary policy, the economy will always remain at the natural level of output.
e. Expansionary monetary policy has no effect on the level of output in the medium run.
f. Fiscal policy cannot affect investment in the medium run because output always returns to its natural level.
g. In the medium run, output and the price level always return to the same value.