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Question 1 Assume that inflation and social welfare are given by = e - ( u - u ) and S= - u - /2
Question 1
Assume that inflation and social welfare are given by
=
e
-
(
u
-
u
) and S=
-
u
-
/2
2
respectively.
We also assume that the expected inflation
e
has been set by the time the central bank gets
to make its decisions
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