Suppose that the Phillips curve is given by =+0.1-24 + and expected inflation is given by...

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Suppose that the Phillips curve is given by ₁=₁+0.1-24₁ + and expected inflation is given by = (1 - 0) + 0-1 where 8 is equal to zero and = 0.01 and does not change. The economy is initially at the natural rate of unemployment, which is 5%, when the authorities decide to bring the unemployment rate down to 3% and hold it there forever. With 0 equal to zero, this will yield a 5% rate of inflation every year. Now suppose that in year (t+6), 0 changes to 1 8 might increase in this way because OA. government policy would mandate inflationary expectations. OB. inflation expectations change constantly. C. inflation expectations adapt y positive inflation. OD. inflation expectations always adapt immediately to the last period's inflation. In year (t + 6), the inflation rate will be 5%. (Enter your response as an integer.) In year (t + 7), the inflation rate will be 5%. (Enter your response as an integer.) In year (t + 8), the inflation rate will be 5%. (Enter your response as an integer.) Suppose that the Phillips curve is given by ₁=₁+0.1-24₁ + and expected inflation is given by = (1 - 0) + 0-1 where 8 is equal to zero and = 0.01 and does not change. The economy is initially at the natural rate of unemployment, which is 5%, when the authorities decide to bring the unemployment rate down to 3% and hold it there forever. With 0 equal to zero, this will yield a 5% rate of inflation every year. Now suppose that in year (t+6), 0 changes to 1 8 might increase in this way because OA. government policy would mandate inflationary expectations. OB. inflation expectations change constantly. C. inflation expectations adapt y positive inflation. OD. inflation expectations always adapt immediately to the last period's inflation. In year (t + 6), the inflation rate will be 5%. (Enter your response as an integer.) In year (t + 7), the inflation rate will be 5%. (Enter your response as an integer.) In year (t + 8), the inflation rate will be 5%. (Enter your response as an integer.)

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