$```$

LRPC $+$

$\backslash$

$```$

Short$-$Run Outcome

SRPC

SRPC

LRPC

Unemployment Rate

In the short run, inflation and unemployment $.$

Now suppose that over time, expected inflation changes in the same direction that actual inflation changes.

On both of the preceding graphs, shift the appropriate curve or curves to reflect the change that brings the economy to its long$-$run state.

After the expansion is over, the economy faces a set of inflation$-$unemployment combinations.