109 108 107 106 level Pric 105 104 103 102 101 100 SRAS Inflation rate (% per year) 6 5 AD 2 Phillips curve 0 2 4 6 8 10 12 Quantity of output (thousands) 14 16 18 20 3 4 5 6 Unemployment rate (%) 7 8 If policymakers choose to contract AD in response to OPEC's actions • inflation will increase. • unemployment will increase. O inflation and unemployment will increase. • nothing will change.