Given the accelerationist Phillips curve Δπ = – 0.3 (U – 6 ) + ρ, s

Given the accelerationist Phillips curve Δπ = – 0.3 (U – 6 ) + ρ, suppose that inflation in the preceding period was 3 percent, unemployment is 6 percent, and there is a price shock of 2 percent. The current inflation rate is ________.

A) 3 percent
B) 0.2 percent
C) 5 percent
D) 1 percent
E) none of the above

ANSWER

C