In the year 2027, aggregate demand and aggregate supply in the imaginary country of Patagonia are represented by the curves AD2027AD2027and AS on the following graph. The price level is currently 102. The graph also shows two potential outcomes for 2028. The first possible aggregate demand curve is given by the curve labeled ADAADAcurve, resulting in the outcome given by point A. The second possible aggregate demand curve is given by the curve labeled ADBADB, resulting in the outcome given by point B.

\f? 8 7 Outcome A 6 5 Outcome B INFLATION RATE (Percent) 4 + 3 Phillips Curve 2 7 0 0 1 2 3 4 5 6 7 8 UNEMPLOYMENT RATE (Percent)