Chapter 35 is about the short-run trade-off between inflation and unemployment. Mainly focusing on both the long run and the short run of such graphs/curves (Relationship between the AD, AS, and Phillips curve). I would rate this chapter a difficulty level of 1.5/3. This is because a lot of the new information given is based on previous chapters, and that made it much easier to understand.
The book starts talking about the Phillips curve, which is a curve that shows the short-run tradeoff between inflation and unemployment. Then, it talks about how the aggregate demand, aggregate supply, and the Phillips curve, all relate to one another. The long run Phillips curve is always vertical, and just as the AS curve slopes upward only in the short run, the tradeoff between inflation and unemployment holds only in the short run.
The book then introduces the new concept of supply shocks, which are events that directly alter firms' costs and prices, shifting the economy's AS curve and thus the Phillips Curve. The next concept introduced is the sacrifice ratio, which is then umber of percentage points of annual output lost in the process of reducing inflation by 1 percentage point. Critics state that it fails to account for people's expectations, so it is inaccurate.
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