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Suppose the Natural Rate of Unemployment Is 6 Percent, the Expected

Question 199

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Suppose the natural rate of unemployment is 6 percent, the expected inflation is 2 percent, and the constant "a" in the short-run Phillips curve equation is 0.8. Change the expected inflation to 3 percent and draw the new Phillips curve. How did it change?

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The 3 percent expected inflation SRPC is...

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