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Phillips Curve and Okun’s Law — completed but need help
understanding part D.

This is from my completed macro homework, but I’m having trouble
understanding where the numbers come from on part D. I assume the
short term high unemployment comes from Okun’s Law and the
sacrifice ratio in part C, but I’m not sure on that. As for the 8%
unemployment over 5 years, I can’t figure where those numbers are
coming from despite looking at similar questions. The entire
question is below with answers. I understand parts A-C. Thanks in
advance!!

Question: Phillips Curve and Okun's Law -- completed but need helpunderstanding part D.This is from my co...

A) u = 0.05

B) graph from book

Question: Phillips Curve and Okun's Law -- completed but need helpunderstanding part D.This is from my co...

C) u = 0.13, using Okun’s law, sacrifice ratio = 16/4 = 4

Question: Phillips Curve and Okun's Law -- completed but need helpunderstanding part D.This is from my co...

Show transcribed image text 1. Phillips Curve: Suppose that an economy has the Phillips curve 0.5 (u 5) a. What is the natural rate of unemployment? b. Graph the short-run and long-run relationships between inflation and unemployment. c. How much cyclical unemployment is necessary to reduce inflation by 4 percentage points? Using Okun's law, compute the sacrifice ratio d. Inflation is running at 6 percent. The central bank wants to reduce it to 2 percent. Give two scenarios that will achieve that goal.

1. Phillips Curve: Suppose that an economy has the Phillips curve 0.5 (u 5) a. What is the natural rate of unemployment? b. Graph the short-run and long-run relationships between inflation and unemployment. c. How much cyclical unemployment is necessary to reduce inflation by 4 percentage points? Using Okun's law, compute the sacrifice ratio d. Inflation is running at 6 percent. The central bank wants to reduce it to 2 percent. Give two scenarios that will achieve that goal.