Using the information in this chapter, label each of the fol- lowing statements true, false, or uncertain. Explain briefly.
a. The original Phillips curve is the negative relation between unemployment and inflation that was first observed in the United Kingdom.
b. The original Phillips curve relation has proven to be very stable across countries and over time.
c. The aggregate supply relation is consistent with the Phil-Now suppose that in year t + 5, u increases from 0 to 1.
Suppose that the government is still determined to keep u at 3% forever.
d. Why might u increase in this way?
e. What will the inflation rate be in years t + 5, t + 6, and t + 7?
f. Do you believe the answer given in (e)? Why or why not?