If the Equation for a Country's Phillips Curve Is $\pi$ = 02 -8(u -

question 101

Multiple Choice

If the equation for a country's Phillips curve is $\pi$ = .02 - .8(u - .05) ,where $\pi$ is the rate of inflation and u is the unemployment rate,what is the short-run inflation rate when unemployment is 4 percent (.04) ?

• A) above 2 percent (.02)
• B) below 2 percent (.02)
• C) 2 percent (.02)
• D) -2 percent (-.02)

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