Macroeconomics 5th Edition by Olivier Blanchard

Exercise 2

Inflation targets
Consider a central bank that has an inflation target,
The Phillips curve is given by
a. If the central bank is able to keep the inflation rate equal to the target inflation rate every period, will there be dramatic fluctuations in unemployment
b. Is the central bank likely to be able to hit its inflation target every period
c. Suppose the natural rate of unemployment,
changes frequently. How will these changes affect the central bank's ability to hit its inflation target Explain.