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a) Inflationary expectations are an important driver of the Phillips curve relationship. What are three different ways inflationary expectations might be modelled? Depict each graphically.
a)
Inflationary expectations are an important driver of the Phillips curve relationship. What are three different ways inflationary expectations might be modelled? Depict each graphically.
b) How might the response of a central bank to an external inflation shock depend upon the way that the home population forms its inflationary expectations?
Good diagrams and explanations please!
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