When you look at monetary or fiscal policy, it’s important to consider the Phillips curve.
A. Explain what the short-run Phillips curve is and why it is important in thinking about economic policy.
B. Explain what stagflation is and why stagflation is inconsistent with the idea of a Phillips curve.
C. Explain the short-run relationship between the Phillips curve and changes in aggregate demand in the AD/AS model.
D. Discuss the relationship between the long-run AS curve and the long-run Phillips curve.