Recession? Maybe. Depression? Get Real.

The unemployment rate during the Great Depression peaked at nearly 25 percent in 1933, after an initial spike from 3 percent in 1929 to nearly 8.7 percent in 1930. The unemployment rate is just 5 percent, only up from 4.5 percent a year ago. Also during the Great Depression there was deflation, which is not happening today.

Source: CNN, May 28, 2008

a. Can the inflation and unemployment trends during the Great Depression be explained by a movement along a short-run Phillips curve?

b. Can the inflation and unemployment trends during 2008 be explained by a movement along a short-run Phillips curve?