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Ch. 33 Phillips Curve

Ch. 33 Phillips Curve. DEFINE… LABEL. Short Run Trade Off b/w inflation and unemployment……..* exists only …. In short run ,,,not in long run. ?. SRPC ….in…. MACRO PRACTICE. 1. Draw the economy in LRE Draw corresponding LRPC and SRPC

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Ch. 33 Phillips Curve

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  1. Ch. 33 Phillips Curve DEFINE… LABEL Short Run Trade Off b/w inflation and unemployment……..* exists only ….. In short run ,,,not in long run ?

  2. SRPC ….in….MACRO PRACTICE 1. • Draw the economy in LRE • Draw corresponding LRPC and SRPC • Identify a determinant to shift AD to create an inflationary gap • Show the results on both graphs • In the long run, how does the economy correct itself? Show the results on both graphs. • Explain why the LRPC is vertical

  3. SRPC ….in….MACRO PRACTICE 2. • Draw the economy in LRE • Draw corresponding LRPC and SRPC • Identify a determinant to shift AD to create a recessionary gap • Show the results on both graphs • In the long run, how does the economy correct itself? Show the results on both graphs. • Explain why the LRPC is vertical

  4. SRPC ….in….MACRO PRACTICE 3. • Draw the economy in LRE • Draw corresponding LRPC and SRPC • Identify a determinant to create stagflation • Show the results on both graphs

  5. …..so can you identify a “RULE” about shifting SRPC? • ….when SRAS shifts right, SRPC shifts left …..

  6. Identifying with just the Phillips Curve • Show LRE • Show Inflationary gap • Show Recessionary gap

  7. Shifting LRPC???? • When? Why? What? (does it mean?)

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