In the figure below, draw a short-run Phillips curve and a long-run Phillips curve if the expected inflation rate is 4 percent and the natural unemployment rate is 6 percent.

Explain how the two change in the short run if:
a. slower growth in aggregate demand causes a recession.
b. the inflation rate increases.
c. the natural unemployment rate increases.

Question

In the figure below, draw a short-run Phillips curve and a long-run Phillips curve if the expected inflation rate is 4 percent and the natural unemployment rate is 6 percent.
  
Explain how the two change in the short run if:
a. slower growth in aggregate demand causes a recession.
b. the inflation rate increases.
c. the natural unemployment rate increases.

Quizplus · Accepted Answer

The Answer of In the figure below, draw a short-run Phillips curve and a long-run Phillips curve if the expected inflation rate is 4 percent and the natural unemployment rate is 6 percent.
  
Explain how the two change in the short run if:
a. slower growth in aggregate demand causes a recession.
b. the inflation rate increases.
c. the natural unemployment rate increases.

In the Figure Below, Draw a Short-Run Phillips Curve and a Long-Run