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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.


Definitions:

Least Restrictive Environment

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Education Of All Handicapped Children Act

A landmark legislation in the United States that mandates the right to public education for all children with disabilities, enacted in 1975.

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A developmental disorder characterized by difficulties in social interaction, communication, and by restricted or repetitive patterns of thought and behavior.

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A mental disorder where individuals feel the need to perform certain routines repeatedly or have certain thoughts repeatedly.

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