Question: The long - run Phillips curve This graph shows the long - run Phillips curve ( LRPC ) and several of the short - run

The long-run Phillips curve
This graph shows the long-run Phillips curve (LRPC) and several of the short-run Phillips curves (PC) for an economy.
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Assume that the economy is initially at point E , with an expected and actual rate of inflation of 6% and anemployment rate of 5%.
Which of the following events could lead the economy to move to point H in the short run?
Net exports increase.
Consumption spending rises.
The government increases spending.
The Fed raises interest rates.
Which of the following statements would best explain a move from point H to point G?
The government pursues an expansionary fiscal policy.
Nominal wages are renegotiated at the higher inflation rate of 9%, leading to an increase in unemployment.
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The government pursues a contractionary monetary policy.
Nominal wages are renegotiated at the lower inflation rate of 3%, leading to an increase in employment.
Which of the following statements is correct?
The long-run Phillips curve shows the positive relationship between unemployment and inflation in the long run.
The long-run unemployment rate is 3%.
The long-run Phillips curve illustrates the temporary tradeoff between unemployment and inflation.
In the long run, changes in the inflation rate have no effect on unemployment.
The long - run Phillips curve This graph shows

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