Chapter 14_Assignment - Ch.14 1 The Phillips curve for the...

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Ch .14 1.The Phillips curve for the United States in the 1960s becomes very steep after unemployment drops below 4%, and rather shallow as unemployment exceeds 6%. Why is a typical Phillips curve shaped this way? 2. Does the long-run Phillips curve make it difficult (if not impossible) for policymakers to increase output and employment beyond full employment in the long run. Policy makers would be willing to use expansionary policy to reduce un-employment just like the Phillips curve suggests. These policies assume the inflation expectations will adjust with a noticeable lag allowing some tradeoff between inflation and unemployment.
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