Suppose that in a given country, the line of best fit approximates the Phillips curve shown here.
(a) Next year, you expect GDP to be 4% above potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?
(b) Next year, you expect GDP to be 4% below potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?
(c) Next year, you expect GDP to be equal to potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?

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The Answer of Suppose that in a given country, the line of best fit approximates the Phillips curve shown here.
(a) Next year, you expect GDP to be 4% above potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?
(b) Next year, you expect GDP to be 4% below potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?
(c) Next year, you expect GDP to be equal to potential GDP. Current inflation expectations are at 2%. How much does your salary have to change in nominal terms in order to maintain your purchasing power at the current level?

Suppose That in a Given Country, the Line of Best