1. The Phillips Curve and Expectations Theory C HAPTER 27

2. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 2 EXHIBIT 1 T HE T HEORETICAL R ELATIONSHIP BETWEEN C HANGES IN A GGREGATE D EMAND AND THE P HILLIPS C URVE

3. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 3 EXHIBIT 2 T HE P HILLIPS C URVE FOR THE U NITED S TATES IN THE 1960 S Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html, Tables B-35 and B-64.

4. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 4 EXHIBIT 3 I NFLATION AND U NEMPLOYMENT R ATES FOR THE U NITED S TATES, 1970–2003 Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html, Tables B-35 and B-64.

5. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 5 EXHIBIT 4 T HE S HORT- R UN AND L ONG- R UN P HILLIPS C URVES

6. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 6 EXHIBIT 5 M ONEY S UPPLY G ROWTH AND P RESIDENTIAL E LECTIONS, 1960–2000 Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html.

7. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 7 EXHIBIT 6 A DAPTIVE E XPECTATIONS VERSUS R ATIONAL E XPECTATIONS

8. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 8 EXHIBIT 7 H OW D IFFERENT M ACROECONOMIC M ODELS C URE I NFLATION

9. Tucker Economics for Today, 4e Ch 27 The Phillips Curve and Expectations Theory © 2005 Thomson/South-Western 9 EXHIBIT 7 H OW D IFFERENT M ACROECONOMIC M ODELS C URE I NFLATION (Continued)