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Draw the long run phillips curve and the short run

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Reference no: EM132415097

The natural rate of unemployment is 6% and the expected inflation is 3%.

a. Draw the long run Phillips curve and the short run Phillips curve if expected inflation and actual inflation are 3%. (Label "A")

b. Show the unemployment and inflation on the graph if the actual inflation is 5% (Label "B"). Unemployment is greater than, less than, equal to the natural rate of unemployment.(circle)

c. Show the economy on the graph if both the expected inflation and the actual inflation are now 5% (Label "C").

Reference no: EM132415097

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