The relationship between inflation and unemployment is given by
π = π^e - 2(u - $\bar u$ ).
(a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points:
A: π = .03,π^e = .03
B: π = .06,π^e = .06
C: π = .03,π^e = .06
D: π = .06,π^e = .03
Label points A,B,C,and D in your diagram.
The unemployment rate at point A equals .05.
(b)What are the values of the natural rate of unemployment and the unemployment rates at points B,C,and D?

Question

The relationship between inflation and unemployment is given by
π = π^e - 2(u -

\bar u

).
(a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points:
A: π = .03,π^e = .03
B: π = .06,π^e = .06
C: π = .03,π^e = .06
D: π = .06,π^e = .03
Label points A,B,C,and D in your diagram.
The unemployment rate at point A equals .05.
(b)What are the values of the natural rate of unemployment and the unemployment rates at points B,C,and D?

Quizplus · Accepted Answer

The Answer of The relationship between inflation and unemployment is given by π = π^e - 2(u - $ \bar u $ ). (a)Draw a diagram showing a long-run Phillips curve and two short-run Phillips curves that contain the following points: A: π = .03,π^e = .03 B: π = .06,π^e = .06 C: π = .03,π^e = .06 D: π = .06,π^e = .03 Label points A,B,C,and D in your diagram. The unemployment rate at point A equals .05. (b)What are the values of the natural rate of unemployment and the unemployment rates at points B,C,and D?

The Relationship Between Inflation and Unemployment Is Given by π uˉ \bar u uˉ

The Relationship Between Inflation and Unemployment Is Given by
π $\bar u$