Figure 138 Alt Text for Figure 13

Figure 13.8 Alt text for Figure 13.8: In figure 13.8, a graph shows the short-run and long-run Phillips curves.
Long description for Figure 13.8: The x-axis is labelled, unemployment rate percent.The y-axis is labelled, inflation rate percent per year.A line labelled, short-run Philips Curve, begins at the top left corner and slopes down to the end of the x-axis.A line labelled, long-run Philips Curve, is perpendicular to the x-axis, and begins fro the x-axis value 5.5%.Lon-run Philips Curve intersects short-run Philips Curve, at point (5.5%, 10%) just past the midpoints of both lines.Point (7.5, 5) is plotted close to the right end of the short-run Philips Curve.The points are connected to their respective coordinates on the x and y-axes with dotted lines.
-Refer to Figure 13.8.Consider the Phillips curves depicted in the graph above.The Bank of Canada announces its intention to decrease inflation from 10 percent to 5 percent per year, and it succeeds. If expectations of inflation are reduced to 8 percent by the Bank of Canada's announcement, the rate of unemployment will be ________ in the short run.

A) less than 5.5 percent
B) 5.5 percent
C) between 5.5 and 7.5 percent
D) 7.5 percent