A macroeconomic model obeys the "natural rate hypothesis" by incorporating

The short-run Phillips curve presents a tradeoff because a

A) lower unemployment rate can be achieved at the cost of a higher inflation rate. B) higher inflation leads to a higher nominal interest rate. C) lower unemployment rate can be achieved at the cost of a lower inflation rate. D) higher price level leads to a lower real GDP. E) higher unemployment rate can be achieved at the cost of a higher inflation rate.

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was

A) 7.7 percent. B) 5.4 percent. C) 4.4 percent. D) 5.8 percent.