Assume the expected inflation rate in a country is 3%, the current unemployment rate is 6%, and

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Question:

Assume the expected inflation rate in a country is 3%, the current unemployment rate is 6%, and the natural rate of unemployment is 4%.
Draw a correctly labeled graph of the short-run and long-run Phillips curves. Label the current short-run equilibrium as point X and plot the numerical values on the graph.
Is the actual inflation rate greater than, less than, or equal to the expected inflation rate of 3%?
Assume loans were made taking into account the expected inflation rate of 3%. Will lenders be better off or worse off after they realize the actual inflation rate identified in part (b)?
Based on the relationship between the actual and expected inflation rates identified in part (a), what will happen to the natural rate of unemployment in the long run?

Countries face trade-offs between producing consumer goods and capital goods.
Country X takes one hour to produce a unit of consumer goods and two hours to produce a unit of capital goods. County Y take two hours to produce a unit of consumer goods and four hours to produce a unit of capital goods. Which country has a comparative advantage in the production of consumer goods?

The following table shows labor-market data for country X. Employed Frictionally unemployed Structurally

B. Calculate the unemployment rate in Country X. Show your work.
C. Calculate the labor force participation rate in Country X. Show your work
D. Draw a correctly labeled graph of the production possibilities curve for Country X, with consumer goods on the horizonal axis and capital goods on the vertical axis. Indicate a point on your graph, labeled Z, that reflects the current level of unemployment.