The following graph illustrates long-run and short-run Phillips curves for an economy that is currently at point A. Long-Run Philips Curve SAPC, 8 Inflation Rate Unemployment Rate Long-Run Philips Curve SAPC SRPC, 8 Inflation Rate + + . 9 Unemployment Rate policy. In the short run, the economy moves from point A to point in the long run, the To reduce inflation, the Fed uses contractionary economy will move to point E . This illustrates that the costs of reducing inflation are temporary and the benefits of reducing inflation are permanent