In the expectations-augmented Phillips curve,π = π^e - 3(u - $ \bar u $ ).If π = 0.03 when π^e = 0.06 and u = 0.06,then $ \bar u $ = A)0)02. B)0)03. C)0)04. D)0)05.

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Quizplus · Accepted Answer

The expectations-augmented Phillips curve is given by π = π^e - 3(u - $ \bar u $ ). Plugging in the values: 0.03 = 0.06 - 3(0.06 - $ \bar u $ ). Solving for $ \bar u $, we get $ \bar u $ = 0.05.

In the Expectations-Augmented Phillips Curve,π = πe - 3(u - uˉ \bar u uˉ

In the Expectations-Augmented Phillips Curve,π = π^e - 3(u - $\bar u$