The expected inflation rate is 5 percent, and the actual inflation rate is 7 percent. According to Friedman, is the economy in long-run equilibrium? Explain your answer. Illustrate graphically what...

The expected inflation rate is 5 percent, and the actual inflation rate is 7 percent. According to Friedman, is the economy in long-run equilibrium? Explain your answer. Illustrate graphically what would happen in the short run and in the long run to the price level and Real GDP level if individuals hold rational expectations, prices and wages are flexible, and individuals underestimate the decrease in aggregate demand (bias downward).