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. What is your forecast for unexpected inflation?
(b) Next year, you expect GDP to be 4% below potential GDP. What is your forecast for unexpected inflation?
(c) Next year, you expect GDP to be equal to potential GDP. What is your forecast for unexpected inflation?
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