1. Suppose the natural rate of unemployment is 6 percent.

On one graph, draw two Phillips curves that can be used to describe the four situations listed below. 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.