Suppose that the expectations-augmented Phillips curve is given by = e 0.5(U U

Suppose that the expectations-augmented Phillips curve is given by π = π^e – 0.5(U – U_n). If expected inflation is 3% and the natural rate of unemployment is 5%, complete the following:

a) Calculate the inflation rate according to the Phillips curve if unemployment is at 4%, 5%, and 6%.

b) Plot the points from part

(a) on a graph, and label the Phillips curve.

c) If wages were to become more rigid, what would happen to the slope of this Phillips curve?