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Why is sustained inflation a purely monetary phenomenon

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Reference no: EM13921838

Briefly answer the following questions.

a) Why is sustained inflation a purely monetary phenomenon?

b) Why is an increase in foreign exchange reserves recorded as a debit (-) item in the balance of payments?

c) Would inflation be still costly if it were constant and fully anticipated all the time?

d) Using AD-AS analysis, describe the effects on the economy of an increase in wages both in the short and in the long run.

Reference no: EM13921838

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