Suppose an Economy Exhibits a Large Unexpected Decrease in Productivity

True/False

Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a decade.However,monetary policymakers are slow to recognize that the change is to potential,not current,output and interpret the decrease in output as a recession that leads current output to fall below potential output.In this scenario,policymakers believe that recessionary pressures are building and incorrectly respond by increasing interest rates,sending the economy into a recessionary gap.