Numbered Phillips curve: contractionary policy and disinflation (A to B to C)

An example figure from the Phillips Curve generator.

Phillips curve graph with numbered axes and gridlines, the unemployment rate numbered every 2% up to 14% and the inflation rate every 1% from −2% to 9%, the axes crossing at 0%: point A at 5% unemployment and 6% inflation, where the blue curve SRPC₁ crosses the vertical red LRPC at uₙ; a black arrow down along SRPC₁ to point B at 8% unemployment and 2% inflation; a lower blue curve SRPC₂ that falls below 0% inflation at higher unemployment, with a blue arrow down to it from SRPC₁; and a black arrow across from B to point C at 5% unemployment and 2% inflation. Dashed lines run to the axes, labeled π₁ at 6%, π₂ at 2%, uₙ at 5% and u₁ at 8% — A Phillips curve graph on numbered axes, with percent signs on the numbers. The economy starts at A, 5% unemployment and 6% inflation, where the short-run Phillips curve SRPC₁ crosses the long-run Phillips curve (LRPC) at the natural rate of 5%. It moves down along SRPC₁ to B, 8% unemployment and 2% inflation, then the SRPC shifts down to SRPC₂ and the economy moves across to C, back at 5% unemployment with inflation at 2%. The inflation axis runs down to −2%, where SRPC₂ falls below 0% (deflation) at higher unemployment.

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Values

A: 5% unemployment, 6% inflation
B: 8% unemployment, 2% inflation
C: 5% unemployment, 2% inflation

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