Why Did the Findings of the Traditional Short-Run Phillips Curve

question 5

Essay

Why did the findings of the traditional short-run Phillips curve imply such a powerful tool for monetary policy?

---

Definitions:

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all interest payments and the repayment of principal.

Bond's Value

The present worth of a bond's future interest payments and its repayment of principal at maturity, adjusted for current market interest rates.

9-Year Duration

A metric indicating the sensitivity of a bond's price to changes in interest rates, represented here as the bond having an average response over a nine-year period.

Default Risks

The likelihood that a borrower will fail to meet the obligations of paying back a loan or interest payments.