Page 170 of Schweser Book 2 is a little unclear. It says that the short-run Phillips curve is “the negative relationship between UNEXPECTED inflation and unemployment” but then in Figure 3 it says that the short run curve has EXPECTED inflation of 8%. My best guess is that the inflation at the intersection of the short run and long run Phillips curve is the EXPECTED inflation, and that different points along the short run curve (and thus on the y-axis) are the ACTUAL inflation. This would then mean that the UNEXPECTED inflation is the difference between these two points. This kind of makes sense, but it means that the y-axis is the ACTUAL inflation, not the UNEXPECTED inflation, as Schweser says. Does this make sense to anyone?
no, the main point is that the two variables are negatively correlated – this is something the Fed needs to consider when CPI goes up and they consider their monetary policy agenda
wow ! Daj… u still remember all this… I really need to gear up if I want level 2 next year 
the two variables you refer to are unexpected inflation and unemployment i assume. but the y-axis of the graph appears to be actual inflation.
ha - thanks! it is still fresh in my head
here is what’s important. If inflation changes are slow and predictable, unemployment will not get effected because salaries will grow accordingly, etc (the vertical line will shift slowly). However, if inflation changes are sudden and unexpected, then unemployment will be effected (the vertical line will not be able to shift quickly enough). Does that help?
kind of, but the text (pages 170-171 of econ) doesnt mention anything anything about the long run curve moving. only that in the short run, the inflation rate will move to another point on the short run curve depending on the inc/dec in money supply and subsequent inc/dec in price level. then if the new rate of inflation is maintained and predicted, the sr curve will shift to that new anticipated equilibrium. but nothing mentioned about LR curve shifting.
the number on the y-axis actually is the actual rate of inflation and it is different from the expected inflation rate (as what the short run curve says); hence it is an unexpected inflation rate, which causes the the move along the short run curve. the short run curve is based on a certain EXPECTED inflation rate. actually on the next page in the book, it does say something about long run curve. only when the natrual unemployment rate changes, the long run curve will shift. otherwise, it stays. and i guess, when the expected inflation rate changes, we need to move along the long run curve to reache the new short run curve with the new expected inflation rate. for this set of curves, the important part i think is to remember the negative relationship between unexpected inf rate (the actual inflation rate we did not expect before) and natural unemployment rate.