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Assume That an Economy Has the Phillips Curve π\pi = π\pi -1 - 0

Question 68

Multiple Choice

Assume that an economy has the Phillips curve π\pi = π\pi -1 - 0.5(u - 0.06) .How many percentage point-years of cyclical unemployment are needed to reduce inflation by 5 percentage points?


A) 20
B) 10
C) 5
D) 2.5

Correct Answer:

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