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a. Suppose that expected inflation equals * regardless of the current level of inflation. i. Describe the MP curve for a given actual inflation rate.

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a. Suppose that expected inflation equals * regardless of the current level of inflation. i. Describe the MP curve for a given actual inflation rate. Does it still have a flat portion? If so, what is r on the flat portion? If not, why not? ii. How, if at all, does a fall in actual inflation affect the MP curve? iii. Use your answers to (i) and (ii) to show the shape of the AD curve

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