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Read the following statements and indicate whether they are True, False or Uncertain. Briefly, but carefully, explain the economic intuition behind the answer using diagrams and examples where appropriate.

A1. The Hodrick-Prescott filter is not only easy to use and accessible Cgiven the availability of various online programs it also seems to provide a reasonable estimate of potential output and the natural rate of unemployment. One implication is that estimating potential output and/or the natural rate of unemployment through more complicated methods is hardly worth the effort.

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