F I L E The accompanying table shows a portion of monthly data on seasonally adjusted inflation and unemployment rates in the United States from January 2009 to November 2010; the entire data set is on the text website, labeled Unemployment and Inflation.

Year Month Unemployment Inflation 2009 Jan 7.7 0.3

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2010 Nov 9.8 0.1 S o u r c e : Bureau o f Labor Statistics.

a. Use a 3-period moving average and exponential smoothing with α = 0.6 to make in-sample forecasts for unemployment. Use the more appropriate smoothing method to forecast unemployment for December 2010.

b. Use a 3-period moving average and exponential smoothing with α = 0.6 to make in-sample forecasts for inflation. Use the more appropriate smoothing method to forecast inflation for December 2010.