Given the utility function in the preceding question, assume that the economy has an expectations-augmented Phillips curve such that: uun =0.1( e) Derive the optimal

Given the utility function in the preceding question, assume that the economy has an expectations-augmented Phillips curve such that:

u−un =−0.1(π −πe)

Derive the optimal values of u and π for

(a) exogenously given πe,

(b) the rationally expected value of πe. Compare these optimal values with those under a credible precommitment to zero inflation.