Discuss observations are explained by modern classical model

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Reference no: EM13897687

"It is now well established that a contractionary monetary shock increases unemployment before reducing in?ation and that the peak impact on unemployment precedes the peak impact on in?ation."

Discuss how well these observations are explained by

(a) the modern classical model, (b) the new Keynesian model, and (c) any one other Keynesian model of your choice.

Reference no: EM13897687

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