The Next Questions Refer to the Following

Multiple Choice

The next questions refer to the following.
Suppose that, in the absence of supply shocks, the inflation-unemployment relationship is inflation rate = expected inflation rate + 2(natural rate of unemployment - actual unemployment rate) .
-If consumers expect an inflation rate of .06,the natural rate of unemployment is .05,and the actual unemployment rate is .07,then the actual inflation rate is

A) .02
B) .04
C) .06
D) .08
E) .10