Use the Following Information to Draw a Graph Showing the Short-Run

question 171

Essay

Use the following information to draw a graph showing the short-run and long-run Phillips curves,and be sure your graph shows the point where the short-run and long-run Phillips curves intersect.
Natural rate of unemployment = 4 percent
Current rate of unemployment = 5 percent
Expected inflation rate = 3 percent
Current inflation rate = 2 percent

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Definitions:

Contraction

The process of becoming smaller or shorter, often in reference to the cooling and solidifying of the Earth's crust which can lead to tectonic activities.

Differential Stress

Stress applied unevenly in different directions, leading to deformation of Earth's crust.

Confining Pressure

A type of pressure applied equally in all directions on a body of rock, often affecting its physical state.

Tension

the force that pulls geological materials apart, often causing stretching and thinning.