Use the information from the previous question. Suppose instead that expectations are rational and that the public anticipates the move by the RBA. What inflation rate should the RBA target? (enter...

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use the information previous Q

Extracted text: Use the information from the previous question. Suppose instead that expectations are rational and that the public anticipates the move by the RBA. What inflation rate should the RBA target? (enter "x" without the quotes if there is not an inflation rate that can produce the target unemployment.) Report you answer as a decimal fraction up to two decimal points.


Extracted text: Use the following information to answer the next two questions. Consider the Phillips curve with e=1.2, u*-0.06, and n--0.06. Suppose that uo-u*. Suppose the current government pressures the RBA to bring the economy to an unemployment rate of 0.03 for the next period. With adaptive expectations, what inflation rate should the RBA target? (enter "x" without the quotes if there is not an inflation rate that can produce the target unemployment.) Report your ans as a decimal fraction up to two decimal points.