Draw two short-run Phillips curves and a long-run Phillips curve for Brazil. On your graph, place two points, one for Brazil in 2014 and one for the central bank’s expectations about the outcome in 2015. Explain any assumptions you make.

Use the following information to work Brazilian inflation and growth get worse, Brazil’s central bank has increased its inflation forecast to 9 percent and cut its forecast for real GDP growth, which it now says will be minus 1.1 percent.