Answer all questions. For each question, identify the statement as True, False, or Uncertain, and explain your reasoning (in total of not more than 150 words). You may use written, diagrammatic, and...

Extracted text: Answer all questions. For each question, identify the statement as True, False, or Uncertain, and explain your reasoning (in total of not more than 150 words). You may use written, diagrammatic, and mathematical arguments as appropriate. 5) Assume there is no change in fiscal policy. Imagine you are given time paths of output and inflation in Figure 1. Note that ye is the level of medium-run output and T is the inflation target. Then, the real interest rate during the same transition period is always below the stabilizing rate of interest. Figure 1: Time Paths time time