Use the table below to answer the following questions.
Table 28.4.2

-The economy's natural unemployment rate is 4 percent. Table 28.4.2 gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent,
A)actual inflation is greater than expected inflation.
B)actual inflation is less than expected inflation.
C)and the inflation rate is 6 percent a year, the short-run and long-run Phillips curves intersect.
D)and the expected inflation rate is 8 percent a year, the short-run Phillips curve shifts downward.
E)aggregate demand increases.

Question

Use the table below to answer the following questions.
Table 28.4.2
 
-The economy's natural unemployment rate is 4 percent. Table 28.4.2 gives some points on the economy's short-run Phillips curve. When the unemployment rate is 4 percent,
A)actual inflation is greater than expected inflation. 
B)actual inflation is less than expected inflation. 
C)and the inflation rate is 6 percent a year, the short-run and long-run Phillips curves intersect. 
D)and the expected inflation rate is 8 percent a year, the short-run Phillips curve shifts downward. 
E)aggregate demand increases.

Quizplus · Accepted Answer

When the unemployment rate is at the natural rate (4 percent), the short-run Phillips curve intersects with the long-run Phillips curve, indicating that actual inflation equals expected inflation.

Use the Table Below to Answer the Following Questions