Assume that the Phillips curve equation is represented by π = π +0.1 - 2ut where π = 0-1. Suppose 0 = 1 and the inflation rate is #₁ = 3% at t = 1. What is the actual rate of inflation for t = 3 if the governm rate of 3% each period? maintains an unemployment O 11%

Assume that the Phillips curve equation is represented by π = π +0.1 - 2ut where π = 0-1. Suppose 0 = 1 and the inflation rate is #₁ = 3% at t = 1. What is the actual rate of inflation for t = 3 if the governm rate of 3% each period? maintains an unemployment O 11%

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.7P

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Question

Assume that the Phillips curve equation is represented by π = +0.1 - 2ut where π = 0-1. Suppose that
0 = 1 and the inflation rate is ₁ = 3% at t = 1. What is the actual rate of inflation for t = 3 if the government
maintains an unemployment rate of 3% each period?
O 11%
O 3%
O 15%
5%
O 7%

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