Figure 132 Alt Text for Figure 13

question 131

Multiple Choice

Figure 13.2 Alt text for Figure 13.2: In figure 13.2, a graph shows the short-run and long-run Phillips curves.
Long description for Figure 13.2: The x-axis is labelled, unemployment rate (percent) .The y-axis is labelled, inflation rate (percent per year) .3 points; A (5, 3) , B (3.8%, 5.5%) , C (6, 1) are plotted on the graph.The points are connected to their respective coordinates on the x and y-axes with dotted lines.A straight line labelled, short-run Philips Curve, begins at the top left corner and slopes down to the bottom center, and passes through points A, B, and C.A straight line labelled, long-run Philips Curve, is perpendicular to the x-axis, begins from the x-axis value 5,and intersects the Short-run Philips Curve at point A.
-Refer to Figure 13.2.Suppose the economy is at point B in the figure above.Which of the following is true?

• A)The expected rate of inflation is 3%.
• B)The natural rate of unemployment is 3.8%.
• C)The current unemployment rate is 5%.
• D)The economy is producing at potential GDP.
• E)Expected inflation and actual inflation are the same.

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