Assume that the Phillips curve is given by: _t- _t-1= a (u_t- m+z/a,

where m = 0.03 and z = 0.03.

a)What is the natural unemployment rate if a = 1?If a = 2;What is the relationship between a and the natural unemployment rate?Explain your answer.

b)Suppose now that as a consequence of an increase in the price of oil, the

m increases to 0.06.What is the new natural unemployment rate if a = 1?If a = 2;What is a's role in how the economy reacts to changes in aggregate supply?