| Question |
Suppose the natural rate of unemployment is 6 percent. On one graph, draw two Phillips curves that describe the four situations listed here. Label the point that shows the position of the economy in each case. a. Actual inflation is 5 percent, and expected inflation is 3 percent. b. Actual inflation is 3 percent, and expected inflation is 5 percent. c. Actual inflation is 5 percent, and expected inflation is 5 percent. d. Actual inflation is 3 percent, and expected inflation is 3 percent. |
