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Use the information below to explain adjustments that move the economy to a long-run equilibrium.Assume that firms and workers have adaptive expectations.
The current unemployment rate = 4%.
The natural rate of unemployment = 6%.
Last year's inflation rate = 3%.
This year's inflation rate = 4%.
Half-Life
Half-life is a term used in nuclear physics and chemistry to describe the time required for one half of the atoms of a radioactive substance to undergo decay.
Growth Model
A mathematical representation used to describe how a quantity changes over time.
Population
The whole number of people or inhabitants in a country or region.
Compounded Continuously
A method of calculating interest where the interest amount is constantly added to the principal, leading to exponential growth.
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