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The graph below shows two short-run Phillips curves: one indicating an expected inflation rate of 0% (labeled SRPC0) and one indicating an expected inflation rate of 1% (labeled SRPC1) and along-run Phillips curve (labeled LRPC). Points A, B, C, and D are for your reference. Assume initially that the economy is inlong-run macro economic equilibrium and expects no inflation (represented by point A).
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