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Suppose that an economy has the Phillips Curve If the economy has the Non-Accelerating Inflation Rate...

Suppose that an economy has the Phillips Curve

If the economy has the Non-Accelerating Inflation Rate of Unemployment as 5%, demonstrate in the Phillips Curve figure the short-run and long-run values on inflation and unemployment. Make sure to include specific numerical values.

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Answer #1

Non-accelerating rate of unemployment the rate at which the expected inflation and the actual inflation are equal. In the short-run, there is a trade-off between inflation and unemployment but in the long-run, there is no such tradeoff between them.

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