Answered: Explain how a rise in Government…

Explain how a rise in Government expending affects: 3.1. The Phillips curve in the short run? How do you think are employers and employees going to react to this policy under adaptive expectations?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter16: Macro Policy Debate: Active Or Passive?

Section: Chapter Questions

Problem 4.5P

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Question

3. Explain how a rise in Government expending affects:
3.1. The Phillips curve in the short run? How do you think are employers and

employees going to react to this policy under adaptive expectations?

3.2. If the demand policy continues to apply how this is going to affect the Philips curve in the long run?

3.3. What about if the agents have rational expectations, is this policy effective?

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