5. An economy has a Phillips curve takes the form of p = 0.04 - 0.5(u...

5. An economy has a Phillips curve takes the form of p = 0.04 - 0.5(u - 0.03) where is the actual inflation rate and u is the unemployment rate.

What is the short-run relationship between inflation and unemployment according to the Phillip curve function above? (1)

Explain demand pull inflation using the expression of Phillips curve above. (2)

Illustrate cost push inflation using the expression of Phillips curve above. (2)

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Rahul Sunny answered 1 year ago

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