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Use the information provided below to answer question (8) to question (12). Suppose that the Phillips curve in a fictional economy is given by =0.36
Use the information provided below to answer question (8) to question (12). Suppose that the Phillips curve in a fictional economy is given by =0.36 In time , the government decides to keep the unemployment rate at 4.5% forever. It is given that 1 = 2%. 8. What is the natural level of the unemployment rate? (A) 5% (B) 4.5% (C) 2.5% (D) 2% 9. When the expected inflation rate is anchored at 3%, what is the inflation rate in year +2? (A)2% (B)4% (C)6% (D)8%
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