Description
Q1. What is the relationship between the short-run Phillips curve and the long-run one? Hint: the answer lies on explaining the transition besides the shape of the curves.
Q2. According to macroeconomists, what would happen if a higher inflation rate becomes embedded in the economy (i.e., people believe they live in a world of high inflation)? Also, what would happen if a lower inflation rate becomes embedded in the economy?
Sample Solution
