If the Phillips curve in an economy is given by π =π-1-0.5(u-0.02), thenit takes 6 percentage points of cyclicalunemployment to reduce inflation by 3percentage pointsrequires 3 percentage points of cyclicalunemployment to reduce the rate ofinflation by 6 percentage pointsthe natural rate of unemployment is 3%the natural rate of unemployment is 5%the natural rate of unemployment is 6%

The relationship between inflation and unemployment is explained by Philip's curve. According to it,…

Answered: If the Phillips curve in an economy is…

If the Phillips curve in an economy is given by π = π-1-0.5(u-0.02), then it takes 6 percentage points of cyclical unemployment to reduce inflation by 3 porcentage points

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 7P

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