Economists Generally Agree That There Is a Short-Run Phillips Curve

question 114

Essay

Economists generally agree that there is a short-run Phillips curve. However, some economists believe that the short-run Phillips curve is steep and that inflation expectations adjust quickly so the long run is short-lived. What do such beliefs imply about the benefits of using policy to reduce unemployment? What do such beliefs imply about the costs of using policy to reduce inflation?

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Definitions:

Juxtaglomerular Apparatus

A specialized structure in the kidney involved in blood pressure regulation by secreting renin in response to blood pressure changes.

Efferent Arteriole

An efferent arteriole is a small artery that emerges from the glomerulus in the kidney, carrying filtered blood away from the glomerulus to the capillaries of the kidney tubules.

Angiotensin II

A hormone that causes blood vessels to constrict, resulting in increased blood pressure, and stimulates the release of aldosterone from the adrenal glands.

Aldosterone Secretion

The release of aldosterone, a steroid hormone, from the adrenal cortex, which regulates sodium and potassium balance in the blood.