Suppose the equation describing the Phillips curve in an economy is

= e 4(U UN)

1. If the expected inflation rate is 2.5 percent and the natural rate of unemployment is 6%, draw a diagram showing the long-run Phillips curve and the current short-run Phillips curve
2. Calculate the unemployment rate corresponding to each of the following points. Assume that the expected inflation rate is 2.5 percent and the natural rate of unemployment is 6%.

Points	Actual inflation
A	0%
B	2.5%
C	5%
D	7