Given the accelerationist Phillips curve Δπ = – 0.7 (U – 5 ) + ρ, s
Given the accelerationist Phillips curve Δπ = – 0.7 (U – 5 ) + ρ, suppose that inflation has increased from 8 percent to 10 percent. If the unemployment rate is 4 percent, then the price shock is ________.
A) 2.7 percent
B) 0.6 percent
C) 1.3 percent
D) 1 percent
E) none of the above
ANSWER
C
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