The Phillips curve in Lowland takes the form of = 0.04 -0.5(u-0.05), where is the actual inflation rate and u is the unemployment rate. The Phillips curve in Highland takes the form of = 0.08-0.75(u - 0.05). The current unemployment rate in both countries is 9 percent (0.09). (a) Explain the similarities in the Phillips curves in Highland and in Lowland. (b) Explain the difference in the Phillips curves in Highland and in Lowland.

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Unemployment is the state of being unemployed, even when an individual is actively seeking work opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed.