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Explain how original phillips curve differs from expectation

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Reference no: EM13153022

Question 1

Explain how the original Phillips curve differs from the expectations-augmented Phillips curve (or the modified, or accelerationist Phillips curve).

Question 2

Explain what effect a decrease in the future expected interest rate will have on the IS curve and LM curve in the current period.

Question 3

Suppose the interest parity condition holds. Also assume that the one-year interest rate in Australia (home country) is 6% and that the one-year interest rate in Canada (foreign country) is 6%. What does this imply about the current versus future expected exchange rate (for the Australian and Canadian dollars)? Explain.

Reference no: EM13153022

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