PLEASE ANSWER THIS QUESTION WITH CORE ECONOMY 2017 UNIT 15.3 TO 15.5

QUESTION 3

Figure 15.6is a scatter plot of the inflation rate and the unemployment rate for the US for each year between 1960 and 2014.

\fWage-setting curve Labour productivity Real profit per worker AV B Price-setting curve (Low unemployment) Real wage Employment, N Employment at labour market equilibriumThe policymakers' preferences The policymakers' preferences and the Phillips curve trade-off Phillips curve Labour supply Feasible set Labour Worse outcomes supply Inflation (%) Inflation (%) C F F ONU ON U = 6% U =3% Policymaker's Best outcome Policymaker's indifference curves indifference curves Employment, N Employment, N