Aggregate supply curve and the phillips curve

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Reference no: EM13869035

a. Explain the link between the aggregate supply curve and the Phillip's curve.

b. If the natural rate of unemployment falls, how will this affect the Phillip's curve?

c. If the sacrifice ratio was 5 and the central bank wanted to lower inflation by 8 percentage points, how much GDP would have to be sacrificed? Would you recommend reducing the inflation all at once, or spreading it out over several years? What would a proponent of rational expectations theory recommend?

Reference no: EM13869035

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