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Suppose That the Fed Unexpectedly Pursues Contractionary Monetary Policy

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Essay

Suppose that the Fed unexpectedly pursues contractionary monetary policy. What will happen to unemployment in the short run? What will happen to unemployment in the long run? Justify your answer using the Phillips curves.


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A measure of the change in value or return between different investments over a specific period.

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The final value of a stock or market index at the conclusion of a trading day.

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