The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a year. Draw a point to show the current unemployment rate and inflation rate according to the news clip. Suppose Iran removes the subsidies and consumers don't know what the higher prices will be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 1. Suppose instead that Iran removes the subsidies and announces the new prices so that consumers know what they are. Illustrate the most likely path of inflation and unemployment. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 2.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Question
20-
18-
16-
14-
124
10-
8-
6-
ST
Inflation rate (percent per year)
6
12
LRPC
10
8
12
14
16
18
20
Unemployment rate (percentage of labour force)
>>> Draw only the objects specified in the question.
SRPC
10
G
Transcribed Image Text:20- 18- 16- 14- 124 10- 8- 6- ST Inflation rate (percent per year) 6 12 LRPC 10 8 12 14 16 18 20 Unemployment rate (percentage of labour force) >>> Draw only the objects specified in the question. SRPC 10 G
The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the
natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a
year.
Draw a point to show the current unemployment rate and inflation rate according to the
news clip.
Suppose Iran removes the subsidies and consumers don't know what the higher prices will
be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow
along the SRPC showing the direction of change, or a new SRPC. Label it 1.
Suppose instead that Iran removes the subsidies and announces the new prices so that
consumers know what they are. Illustrate the most likely path of inflation and
unemployment. Draw either an arrow along the SRPC showing the direction of change, or
a new SRPC Label it 2.
ILS
Transcribed Image Text:The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a year. Draw a point to show the current unemployment rate and inflation rate according to the news clip. Suppose Iran removes the subsidies and consumers don't know what the higher prices will be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 1. Suppose instead that Iran removes the subsidies and announces the new prices so that consumers know what they are. Illustrate the most likely path of inflation and unemployment. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC Label it 2. ILS
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