Question 2. Think of the Phillips curve equation we discussed in Chapter 11: art=7rt_1+m7;+a (a) Draw the Phillips curve diagram. Make sure to label the curves and axeses properly. (2 points) (b) Suppose you're the head of Central bank and you observe the inationary pressures Ukraine-Russia war has created in the US econorny. Which parameter would capture the observed inationary effects on the Phillips curve? Draw the effect of this on the Phillips curve? Make sure to label before and after carefully. (Note: You can redraw your graph on part a) and Show the effect on it). (5 points) (c) Suppose MP rule is Rt - T = m(Tt - 7). Briefly comment on what action FED would take to control the inflation and why. In Figure 1 below you see the actual data on Federal Funds Rate. Is this in line with your advice or not? (3 points) Figure 1: Federal Funds Effective Rate FRED - Federal Funds Effective Rate 0.22 0.20 0.18 0.16 0.14 0.12 0.10 0.08 0.06 0.04 Jul 2021 Aug 2021 Sep 2021 Oct 2021 Nov 2021 Dec 2021 an 2022 Feb 2022 Mar 2022 Source: Board of Governors of the Federal Reserve System (US), Federal Funds Effective Rate [FEDFUNDS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FEDFUNDS, April 22, 2022