Quote:
Originally posted by ARRH
I had to know how the govt lowers inflation through tightening monetary policy, which lowers inflation slightly, but massively increases unemployment. And then the slow recovery through workers having to accept lower wages, ending up back on the long-run Phillips curve, and creating a new short-run Phillips curve.
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Glad it went okay. I didn't want to get too detailed in the response as from your post I assumed you were just looking for a general understanding of it and not the implications of policy with regard to it and shifts from long-run to short run and vice versa.