The economy is currently producing 5% less output than its potential. In an attempt to boost output, the federal government announces an unexpected stimulus package that you expect will increase output to 5% above potential. a. Move the point on the Phillips curve to illustrate the relationship between unexpected inflation and the output gap after the stimulus. Phillips Curve Unexpected Inflation Output gap -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 -4 -3 -2 -1 0 1 2 3 4 b. The initial unemployment rate before the stimulus was 7.5%, and the final unemployment rate afterward is 2.5%. On the labor market Phillips curve, show the equilibrium unemployment rate. Labor Market Phillips Curve Unexpected Inflation Unemployment Rate