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The graph below depicts the Short-Run Phillips Curve (SRPC) when the public expects no inflation in the economy. Inflation Rate % in SRPC Unemployment rate
The graph below depicts the Short-Run Phillips Curve (SRPC) when the public expects no inflation in the economy. Inflation Rate % in SRPC Unemployment rate (%) . . . 1. According to this SRPC, if unemployment is 2%, then inflation would be %? 2. Assume that the public's inflation expectations changed so that they now expect the inflation rate increases by 3%. How would the graph change? 3. If the expected unemployment rate is still 2%, inflation would now be % 4. According to the SRPC curve, what is the relationship between unemployment and inflation? 5. What does the SRPC tell us about the impact of inflationary expectations on inflation
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