The figure above shows some Phillips curves for an economy.
-In the figure above, the shift from the short-run Phillips curve SRPC₀ and the long-run Phillips curve LRPC₀ to the short-run Phillips curve SRPC₂ and the long-run Phillips curve LRPC₂ is the result of ________ in the expected inflation rate and ________ in the natural unemployment rate.
Definitions:
Marginal Tax Rate
The rate at which an additional dollar of income is taxed, representing the percentage of tax applied to the last dollar earned.
Tax-Free
Tax-free describes goods, transactions, or income that are not subject to taxation by the government.
Taxed
Subjected to a financial charge or levy by a government on income, goods, or activities.
Progressive Tax
A tax system in which the tax rate increases as the taxable amount increases, resulting in those who have higher incomes being taxed at a higher rate.
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