**Question **# Chapter 12, page 478 in the 8th edition, Numerical Problem 3, which is the same as Numerical Problem2 on page 477 in the 9th edition, and Numerical problem 2 on page 486 of the 10th edition.In a certain economy the expectations-augmented Phillips curve is \pi=\pi^{e}-2(u-\bar{u}), \quad \text { and } \quad \bar{u}=0.06 a. Graph the Phillips curve of this economy for an expected inflation rate of 0.10. If the Fed chooses to keep the actual inflation rate at 0.10, what will be the unemployment rate? b. An aggregate demand shock (resulting from increased military spending) raises expected inflationto 0.12 (the natural unemployment rate is unaffected). Graph the new Phillips curve and compare itto the curve you drew in Part (a). What happens to the unemployment rate if the Fed holds actualinflation at 0.10? What happens to the Phillips curve and the unemployment rate if the Fed an-nounces that it will hold inflation at 0.10 after the aggregate demand shock, and this announcementis fully believed by the public? c. Suppose that a supply shock (a drought) raises expected inflation to 0.12 and raises the natural unemployment rate to 0.08. Repeat Part (b).2