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If the Equation for a Country's Phillips Curve Is π

Question 49

Multiple Choice

If the equation for a country's Phillips curve is π = 0.02 - 0.8(u - 0.05) , where π is the rate of inflation and u is the unemployment rate, what is the short-run inflation rate when unemployment is 4 percent (0.04) ?


A) above 2 percent (0.02)
B) below 2 percent (0.02)
C) 2 percent (0.02)
D) -2 percent (-0.02)

Correct Answer:

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