Current output is 542,000. Potential output is $40,000. Expected inflation is 3%. The responsiveness of wage growth to a change in unemployment is 0.5. The
Current output is 542,000. Potential output is $40,000. Expected inflation is 3%. The responsiveness of wage growth to a change in unemployment is 0.5. The responsiveness of output to unemployment is 1.5. The current aggregate price index is 5200. What would we expect the price index to be in the next period? What percentage change is this? Is the change higher or lower than expected inflation
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