As world economies recover from the financial crisis in 2008 and 2009, the U.S. economy returns to full employment and expected inflation equals actual inflation

Question

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When the U.S. economy returns to full employment and expected inflation equals actual inflation, it indicates that the economy is stabilizing and adjusting back to its natural rate of unemployment, which is represented by the long-run Phillips curve. This curve shows the relationship between unemployment and inflation when expectations are fully adjusted.

As World Economies Recover from the Financial Crisis in 2008