Congratulations. You've just been appointed finance minister of Inflationland. Inflation has been ongoing for the past five years at 5 percent. The target rate of unemployment, 5 percent, is also the actual rate.
a. Demonstrate the economy's likely position on both short-run and long-run Phillips curves.
b. The president tells you she wants to be reelected. Devise a monetary policy strategy for her that might help her accomplish her goal.
c. Demonstrate that strategy graphically, including the likely long-run consequences.