Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 35 - Part XII - The Short-Run Trade-Off between Inflation and Unemployment - Problems and Applications - Page 791: 1

Answer

Please see the graph. The four points are labeled on the two curves.

Work Step by Step

$PC_1$ is the Phillips curve where expected inflation is 3 percent, and $PC_2$ is the Phillips curve where expected inflation is 5 percent. Since there is expected inflation of 3 percent in these scenarios, the two points on $PC_1$ are A and D. Since there is expected inflation of 5 percent in these scenarios, the two points on $PC_2$ are B and C.
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