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Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.
Short-Run Phillips Curve
An economic model that shows an inverse relationship between the rate of unemployment and the rate of inflation for a given economy over a short period.
Money Supply
The entire volume of money assets within an economy at a particular time.
Fed Increases
Refers to the Federal Reserve raising interest rates or tightening monetary policy, typically to combat inflation or overheating in the economy.
- Understand the relationship between money supply growth, inflation, and unemployment in the long run.
- Comprehend the concept of the Phillips curve in the short run and long run.
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Learning Objectives
- Understand the relationship between money supply growth, inflation, and unemployment in the long run.
- Comprehend the concept of the Phillips curve in the short run and long run.
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