a. Assuming the Federal Reserve targets a 2 percent inflation rate and a 4 percent natural unemployment rate over a one-year period, discuss the economy's current alignment to those targets. Data on US inflation and unemployment may be obtained from the Bureau of Labor Statistics or the Federal Reserve Bank of St. Louis.

b. Forecast inflation and unemployment one-year ahead, making an assumption about next year's real GDP growth rate and using the Okun's law and the Phillips curve. You may assume ab coefficient of 1, that expected inflation is equal to actual inflation, and a negative supply shock v=0.5%. Provide an interpretation of the supply shock based on current events in the news. Make sure you justify your assumption of the real GDP growth rate, either documenting precisely its source or explaining your reasoning.

c. Make one chart or a table showing the inflation and GDP forecasts you made and discuss your results.