4. The text notes that changes in oil prices can affect the inflation unemployment outcome. Explain what effect changes in oil prices may have on these two variables.

5. The introduction to this chapter suggests that unemployment fell, and inflation generally fell, through most of the 1990s. What phase (Phillips, stagflation, or recovery) does this represent? Relative to U.S. experience from the 1960s until the 1990s, what was unusual about this?

6. Suppose that declining resource supplies reduce potential output in each period by 4%. What kind of monetary policy would be needed to maintain a zero rate of inflation at full employment?

7. The Humphrey-Hawkins Act of 1978 required that the federal government maintain an unemployment rate of 4% and hold the inflation rate to less than 3%. What does the inflation-unemployment relationship tell you about achieving such goals?