Consider the following figure. In this economy, the Solow growth rate is 1% per year: Tat (1) X% LRAS Solow growth rate /SRAS (exp. inflation - 9%), AD=M + = 10% AD M+=6% Reel GOP prowth rate a. Calculate the inflation rate at X in this economy. b. If spending growth were 6% in this economy, what would the inflation rate be in the long run, assuming the Solow growth ate stays the same?

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