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Answer the questions below on the basis of the following data. Actual Inflation Expected Inflation Point...

Answer the questions below on the basis of the following data.

Actual Inflation Expected Inflation
Point A: 3% 2%
Point B: 4% 4%
Point C: 2% 4%

  1. Suppose the equation describing the Phillips curve is
    π = πe − 2(U − 5).

    For each of the points: A, B, and C, calculate the unemployment rate. Show all your work.

  2. Based on the equation in part a, what is the numerical value of the natural rate of unemployment? Explain how you know.

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