Recently, policymakers have debated whether an increase in the federal minimum wage (currently $7.25 an hour) would be good for the economy. Use a Phillips curve to explain how inflation would change for the following scenarios. Assume that the output gap does not change.

a. Policymakers announce that effective next week the federal minimum wage will be $15 an hour.

b. Policymakers announce that the federal minimum wage will increase to $15 an hour over the course of the next 10 years by annual increases of $0.78.

c. Explain how the initial increase in the federal minimum wage for low-wage earners could lead to a wage-price spiral throughout the economy.