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Unformatted text preview: 6. Suppose the central bank tries to maintain an unemployment rate below the natural rate. What are the implications for inflation? 7. Ben Bernanke (the Fed Chair) has the easiest job in the world. All he has to do is reduce the interest rate when the unemployment rate rises and increase the interest rate when the unemployment rate falls. Evaluate this statement. 8. What is required to reduce inflation? How does your answer change if the economy is characterized by rational expectations?...
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This note was uploaded on 06/17/2009 for the course ECON 20091_ECO taught by Professor Mohammadsafarzadeh during the Fall '09 term at USC.
- Fall '09
- Phillips Curve