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In: Economics

A. Draw a short run Philips curve. Label it in full, and include it in your...

  1. A. Draw a short run Philips curve. Label it in full, and include it in your email, as an attachment with your exam. Explain the reasons that underlie the short run cause and effect relationship, as originally stated by A. W. Philips.

B. How is the short run Philips curve being used today (2020) in the USA? Give one example of the method being practiced today. What is the expected gain?  

C. Some countries have had Philips curve results completely contrary to the results expected in part A. Chile under President Salvatore Allende (1971-1973) and Venezuela from President Hugo Chavez (and continuing today with his successor) are examples of Philips curve based policies that have failed. Milton Friedman, and others, have warned that a long run Philips curve is harmful to a country’s economy.   Draw a new, separate Philips curve, following Milton Friedman’s warning.  Explain the cause and effect relationship that Milton Friedman specified would lead to this counterproductive outcome, as well.

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Expert Solution

Rahul Sunny answered 1 year ago
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