Question: In the augmented-Phillips curve given as e t = t +0.15 - - 3ut. Originally, suppose that people believe that t = 0.02. If

In the augmented-Phillips curve given as e t = t +0.15 - - 3ut. Originally, suppose that people believe that t = 0.02. If the government implements a monetary policy leading to t = 0.04 and people change their expectation to t = 0.04, what will happen? (A) The augmented-Phillips curve shifts down and the unemployment rate is less than the natural unemployment rate (B) The augmented-Phillips curve shifts down and the unemployment rate is greater than the natural unemployment rate (C) The augmented-Phillips curve will shift down and the unemployment rate is equal to the natural unemployment rate. (D) The augmented-Phillips curve will shift up and the unemployment rate is less than the natural unemployment rate. (E) The augmented-Phillips curve will shift up and the unemployment rate is greater than the natural unemployment rate. (F) The augmented-Phillips curve will shift up and the unemployment rate is equal to the natural unemployment rate.

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