Suppose the natural real GDP is constant at $100 with 4% inflation rate. Given the following table.

Output Inflation

Ratio Rate

96 2%

98 3%

100 4%

102 5%

104 6%

An inverse supply shock raises the inflation rate associated with every output ratio increases by 2%. Graph the SP curve and complete the following table.

Inflation Rate Output Ratio

Accommodating Policy ___________ __________

Natural Policy ___________ __________

Extinguishing Policy ___________ __________