Question: Construct a table like the one in the diagram, only this time assume that the government wishes to reduce unemployment to 5 per cent. Assume

Construct a table like the one in the diagram, only this time assume that the government wishes to reduce unemployment to 5 per cent. Assume that every year from year 1 onwards the government is prepared to expand aggregate demand by whatever it takes to do this. If this expansion of demand gives f(1/U) = 7 per cent, fill in the table for the first six years. Do you think that after a couple of years people might begin to base their expectations differently?

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