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Lec11handout - The Short-Run Trade-off between Inflation...

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The Short-Run Trade-off between Inflation and Unemployment Slides 11 July 27 2010 1 Intro Macro
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The Phillips Curve Phillips curve Shows the short-run trade-off Between inflation and unemployment Origins of the Phillips curve 1958, economist A. W. Phillips “The relationship between unemployment and the rate of change of money wages in the United Kingdom, 1861 –1957” Negative correlation between the rate of unemployment and the rate of inflation 2 Intro Macro
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The Phillips Curve Aggregate demand (AD), aggregate supply (AS), and the Phillips curve Phillips curve Combinations of inflation and unemployment That arise in the short run As shifts in the aggregate-demand curve Move the economy along the short-run aggregate- supply curve 5 Intro Macro
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