2a) Explain the natural unemployment rate and its relationship to inflation rate. Based on your understanding of the Phillips curve, explain what happens to actual inflation (relative to expected inflation) when the actual unemployment rate is either above or below the natural rate of unemployment.

2b) Based on your understanding of the Phillips curve, is it possible for the unemployment rate to increase while inflation increases? Explain.

2c) Using data from World Development Indicators, list five countries with the highest and the lowest unemployment rates. Repeat the exercise for the inflation rates. Discuss the relationship between the unemployment rate and the inflation rate for Japan and Western European countries in the recent years.