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**BarandaMan****Guest**

Hi there!

This step in the textbook has had me stumped

tinypic.com/r/24359up/5

So there is one term on the RHS which clearly makes a lot of sense, but then somehow, there is a Pi* and (Pi - Pi*) term, broken down from the initial term. We require it in this format to show inflation bias, just incase you are interested. But I cannot seem to find a way to make it like that.

Please help :D

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 95,129

Hi;

That is correct, what have you tried?

**In mathematics, you don't understand things. You just get used to them.**

**If it ain't broke, fix it until it is.**

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**BarandaMan****Guest**

bobbym wrote:

Hi;

That is correct, what have you tried?

You did it that quickly? Oh my....

I have tried expanding the RHS, splitting them up into three terms each with the same denominator. I worked backwards (cheated) from the answer to try and saw that:

aPi*=Pi*(a+b^2-b^2) = Pi*(1 - (b^2)/a+b^2) = Pi* - (Pi*b^2/a+b^2) which is the term, but I do not know how I would have got there without the answer to go back from. Does this make sense?

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 95,129

Hi;

I am working on it, so far I am not getting it either.

**In mathematics, you don't understand things. You just get used to them.**

**If it ain't broke, fix it until it is.**

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**BarandaMan****Guest**

bobbym wrote:

Hi;

I am working on it, so far I am not getting it either.

Ok thank you. Don't spend too long on it if it is too much hassle, I do not mind going backwards in the exam

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 95,129

Hi;

The only thing I can think of is he used this identity here.

Why he wanted to? I do not know.

**In mathematics, you don't understand things. You just get used to them.**

**If it ain't broke, fix it until it is.**

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**BarandaMan****Guest**

Oh my, but this identity works with this example completely? I think I should study all of the identities.... you are incredible, again, bobby!

Haha (and still a genius...)

**bobbym****Administrator**- From: Bumpkinland
- Registered: 2009-04-12
- Posts: 95,129

Him using that identity is very weird. I have no idea why he wanted to get the

together. The original equation was fine.

**In mathematics, you don't understand things. You just get used to them.**

**If it ain't broke, fix it until it is.**

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