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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Draw the long-run trade-off between inflation and unemployment. Explain how the short-run and long-run trade-offs are related.

To determine

Long-run Phillips curve.

Explanation

Figure 1 shows the long-run Phillips curve.

Figure 1

In Figure 1, the vertical axis measures the inflation rate and the horizontal axis measures the unemployment rate. SRPC1 and SRPC2 show a shift in the short-run Phillips curve. The vertical line shows the long-run Phillips curve. In long-run, there is no tradeoff between inflation and unemployment...

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