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(05.02 MC) Use the graph to answer the question that follows. Graph has UNP rate along the horizontal axis and inflation rate along the vertical
(05.02 MC) Use the graph to answer the question that follows. Graph has UNP rate along the horizontal axis and inflation rate along the vertical axis. A vertical line labeled LR corresponds to a horizontal axis value Uo. A second vertical line, labeled LR prime, is to the left of LR and corresponds to a horizontal axis value U1. In the accompanying graph, the long-run Phillips curve has shifted from LR to LR. Which of the following could explain this shift? (1 point) Expansionary fiscal policy that reduces unemployment and increases inflation A lower expected rate of inflation The economy moving, reaching full employment, with real GDP corresponding to long-run aggregate supply More efficient labor markets that reduce frictional unemployment and the natural rate of unemployment An inward shift in short-run aggregate supply that increases cyclical unemployment
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