2. The economy of G'ville currently has an unemployment rate of 9% and a natural rate of unemployment of 6%.

a. Using correctly labeled side by side graphs of AD/AS and the LRPC and SRPC

i. Label the current equilibrium on AD/AS as Ye and PLe. Label the full employment output as Yf.

ii. On the Phillips Curves: Label the current and natural rates of unemployment with the

appropriate numbers.

b. Assume this economy was allowed to correct itself in the long run.

i. Make all adjustments and labels to both graphs from part "a"