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During 2007-08, the Federal Reserve adopted an expansionary monetary policy by lowering the federal funds rate target from 5.25% on 9/17/07 to effectively zero on 12/16/08.

a. According to the original Phillips Curve, illustrate what would be the short-run and long-run impact of this expansionary monetary policy on wage inflation and unemployment?

b. According to the Phillips Curve of the Traditional Keynesians, what would be the short-run and long-run impact of this expansionary monetary policy on price inflation and unemployment?

c. According to the Augmented Phillips Curve, what would be the short-run and long-run impact of this expansionary monetary policy on price inflation and unemployment?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922719

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