Question: In each of the scenarios listed below, estimate the unemployment rate in comparison to the natural rate (u*).
a. Inflation is steady at 2% for two years but then increases to 5% for a year.
b. Inflation is steady at 10% for two years but then decreases to 5% for a year.
c. Inflation is steady at 8% for several years.
d. Inflation is steady at 2% for three years, and then the Fed announces that inflation will be 3% one year later.