6. [EXERCISE 6 ( 20 MARKS)] Suppose that the Phillips curve is given by : TT - T = 0.08 +0.1m 2u where m is the markup of prices over wages. Suppose that m is initially equal to 20% but that as a result of a sharp increase in oil prices, m increases to 40% in year t and after. 3 (a) (5 marks) Why would an increase in oil prices result in an increase in m? (b) ( 5 marks) Find the natural rate of unemployment in this economy un, as a function of m. (c) (5 marks) What is the long-run effect of the increase in m on the natural rate of unemployment? (Hint: you can compute the change in u, when m changes from 20% to 40%) (d) (5 marks) Same question as in (e) but with the following Phillips curve TT - Ti = 0.08 +0.1m - 4u