Question: Use the data in problem 1, construct a spreadsheet. model for this hypothetical economy and use it to solve recursively for the path taken by

Use the data in problem 1, construct a spreadsheet. model for this hypothetical economy and use it to solve recursively for the path taken by the unemployment and inflation rates for 25 years. Make a graph of this path with inflation on the vertical and unemployment on the horizontal axis.

Where indicated, these problems refer to a hypothetical economy described by the following:

image text in transcribed

Note that we have used a percentage for the natural rate of unemployment (4%), so for consistency we must do likewise for all the percentage terms.

= -.5(u-4)

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