The accompanying graph depicts the Short-Run Phillips Curve (SRPC) when the public expects no inflation in the economy. a. According to this SRPC, what would inflation be if unemployment is 9%? 0 Incorrect b. Please move the SRPC line to reflect what would happen if the public's inflation expectations increased so that they now expect the inflation rate to increase by 2%. c. If the unemployment rate is still 9%, what is the new inflation rate after this change in expectations? % 2 % Inflation rate (%) 7 6 5 4 0 -1 -2 -3 0 1 SRPC 2 4 5 6 Unemployment rate (%) 3 7 8 9 10

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The accompanying graph depicts the Short-Run Phillips
O Curve (SRPC) when the public expects no inflation in the
economy.
Macmillan Learning
a. According to this SRPC, what would inflation be if
unemployment is 9%?
0
Incorrect
b. Please move the SRPC line to reflect what would happen if
the public's inflation expectations increased so that they now
expect the inflation rate to increase by 2%.
c. If the unemployment rate is still 9%, what is the new
inflation rate after this change in expectations?
%
2
%
Inflation rate (%)
7
6
5
4
3
2
1
0
-1
-2
-3
0 1
SRPC
2
3
4 5 6
Unemployment rate (%)
7
8
9
10
Transcribed Image Text:The accompanying graph depicts the Short-Run Phillips O Curve (SRPC) when the public expects no inflation in the economy. Macmillan Learning a. According to this SRPC, what would inflation be if unemployment is 9%? 0 Incorrect b. Please move the SRPC line to reflect what would happen if the public's inflation expectations increased so that they now expect the inflation rate to increase by 2%. c. If the unemployment rate is still 9%, what is the new inflation rate after this change in expectations? % 2 % Inflation rate (%) 7 6 5 4 3 2 1 0 -1 -2 -3 0 1 SRPC 2 3 4 5 6 Unemployment rate (%) 7 8 9 10
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