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Suppose that the Phillips curve is given by m= n, + ( m + z) - aut. where IT = (1 -0) 1 + 0

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Suppose that the Phillips curve is given by m= n, + ( m + z) - aut. where IT = (1 -0) 1 + 0 5-1 Suppose that m = 2%, z = 3%, a = 0.7, and 0 = 1. Change in inflation Given this information, write out the equation for the change in the inflation rate as 2 4 5 7 8 9 10 a function of the unemployment rate. The change in the inflation rate as a function of the unemployment rate can be written as: . (Write out the equation and substitute in the information given. Do not include the percent sign in your equation.) (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the _ character.) -9- -10 Unemployment rate

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