Figure 17-5
-Refer to Figure 17-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

Question

Figure 17-5 
-Refer to Figure 17-5.Consider the Phillips curves shown in the above graph.We can conclude from this graph that

Quizplus · Accepted Answer

The Phillips curve illustrates the inverse relationship between the rate of inflation and the rate of unemployment. The natural rate of unemployment is the rate at which the economy settles in the long run, which is shown as 5.5 percent in the graph. The expected rate of inflation is where the short-run Phillips curves intersect the long-run Phillips curve, indicating an expectation of 10 percent inflation. Lastly, moving along the short-run Phillips curve from a higher inflation rate to a lower one (e.g., from 10 percent to 5 percent) would indeed result in higher unemployment in the short run, as indicated by the shift to 7.5 percent unemployment.

Figure 17-5 -Refer to Figure 17-5.Consider the Phillips Curves Shown in the Shown