Set up a correctly labeled Phillips Curve graph to begin each scenario. Then, show and explain below what happens to the short-run Phillips curve. Assume the natural rate of unemployment is 5%. When showing a movement along the curve, label the initial point, A, and the new point, B. Use standard notation when shifting the curve.

1. Government spending increases.

2. The price of crude oil and most sources of energy decreases.

3. Inflation expectations rise from 3% to 6%.

4. The Fed increases interest rates with contractionary monetary policy.

5. Inflation expectations fall from 5% to 2%.

6. The government increases income taxes.

7. Tornadoes strike the South and Midwest destroying much of the nations manufacturing ability.

8. Consumer confidence falls amid news ofpolitical squabbling.