Question

1. Suppose Country A’s potential (or natural) output level is $10B. In 2017, the expected price...

1. Suppose Country A’s potential (or natural) output level is $10B. In 2017, the expected price levelwas150, the actual price level was 140, and the actual output was $8B. Determine α.

2. In 2018, the expected price level was 140, and the actual output was $12B. Find the actual price level in 2018.

3. Suppose Country A’s natural rate of unemployment is 5%. In 2017, the actual unemployment rate was 7%, the actual inflation rate was 1%, and the expected inflation rate was 2%, and there was no shock. Find β.

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