Short Answer
The relationship between inflation and unemployment is given by π = πᵉ - 3(u - .06).
a.Graph the short-run and long-run Phillips curves.
b.What is the value of the natural rate of unemployment?
c.If actual inflation is .02 and expected inflation is .05,what is the unemployment rate?
d.If actual inflation is .08 and expected inflation is .05,what is the unemployment rate?
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a.Long run: vertical line at u...View Answer
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