According to adaptive expectations, what happensto the inflation rate and the unemploymentrate in the following situations?a. Initially, the economy is operating at thenatural rate of 6 percent unemployment.The anticipated rate of inflation is6 percent, and the actual rate is also6 percent.b. In the next period, there is an unexpected risein the inflation rate to 10 percent.c. In the next period, there is an unexpected risein the inflation rate to 12 percent.

ENGR.ECONOMIC ANALYSIS
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According to adaptive expectations, what happens
to the inflation rate and the unemployment
rate in the following situations?
a. Initially, the economy is operating at the
natural rate of 6 percent unemployment.
The anticipated rate of inflation is
6 percent, and the actual rate is also
6 percent.
b. In the next period, there is an unexpected rise
in the inflation rate to 10 percent.
c. In the next period, there is an unexpected rise
in the inflation rate to 12 percent.
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