Question

How the inflation and unemployment related in the short run?

Answer 1

rofits increase, employment also increases, returning the unemploymentrate to the natural rate as the economy moves from point B to point C. The expected rate of inflation has also decreased due to different inflationexpectations, resulting in a shift of theshort-run Phillips curve.

Answer 2

As profits increase, employment also increases, returning theunemployment rate to the natural rate as the economy moves from point B to point C. The expected rate of inflationhas also decreased due to different inflation expectations, resulting in a shift of the short-run Phillips curve.