1. (b)Suppose the situation is as above but the central bank wants to bring down inflation within three periods. What path for the output gaps would you suggest it aims for? Why?

Q6. Assume that B=1, It, = 1,_1, and z, =0, so the Phillips curve is T, = 1 -1+ Y, (a) Suppose the inflation rate is 9% and the central bank wants to bring it down to 3% in the next year. What output gap should it try to achieve