Concept Introduction:
Inflation: When the price of any good increases continuously for an interval of time it is called inflation.
Short Run Phillips Curve: The curve which shows how a change in inflation is related to the unemployment rate in the short run. It is a negatively sloped curve.
Long Run Phillips Curve: The curve which shows how a change in inflation is related to the unemployment rate in the long run. It is a vertical curve.
Fiscal policy: It includes government expenditure and taxes. When the government expenditure is increased or taxes are decreased then aggregate demand (AD) curve shifts rightward and vice versa.
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