Inflation and Unemployment. Businesses commonly project revenues under alternative economic scenarios. For a stylized example, inflation could be high or low and unemployment could be high or low....

Inflation and Unemployment. Businesses commonly project revenues under alternative economic scenarios. For a stylized example, inflation could be high or low and unemployment could be high or low. There are four possible scenarios, with the following assumed probabilities:

(a) What is the probability of high inflation?

(b) What is the probability of high inflation if unemployment is high?

(c) Are inflation and unemployment independent?