This exercise will help you think about the relation between inflation and output in the macroeconomy. Suppose that the government of Tritonland can fix the inflation level p

>2 − 30. The government and the ASE interact as follows. First, the ASE selects the rate of nominal wage increase. Then the government chooses its monetary policy (and hence sets inflation) after observing the nominal wage increases set by the ASE. Assume that 0 … W

#

… 10 and 0 … p

#

… 10.