If the Equation for a Country's Phillips Curve Is $\pi$ = 002 - 08(u - 0

question 83

Multiple Choice

If the equation for a country's Phillips curve is $\pi$ = 0.02 - 0.8(u - 0.05) , 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 (0.04) ?

• A) above 2 percent (0.02)
• B) below 2 percent (0.02)
• C) 2 percent (0.02)
• D) -2 percent (-0.02)

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