The data in Figure 12.14 suggest an unemployment coefficient of approximately -1.0 in the Phillips curve. That is, the Phillips curve is n- n(-1) = -(1.0)(U - U*) . Assume the natural rate, U*, is 5 percent. Actual unemployment is 5 percent in 2020, 7 percent in 2021, 6 percent in 2022, and 5 percent in 2023. Inflation is 5 percent in 2020. What is inflation in 2023? (Assume there are no supply shocks.)

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FIGURE 12.14 Evidence for the Phillips Curve, 1960-2009 Change 6 in inflation (percentage points) 1974 4 3 2 .1980 -2 -3 -2 2 3 Deviation of unemployment from natural rate (percentage points)