Question
Consider two countries, namely Alpha and Beta in which there is imperfect information. These two countries differ only in one respect: Alpha: of money supply
Consider two countries, namely Alpha and Beta in which there is imperfect information. These two countries differ only in one respect:
Alpha: of money supply and inflation have remained stable in the last two decades.
Growth
Beta: Growth of money supply and inflation have varied unpredictably in the last two decades.
Given this difference for any changes in the prices of goods/services that producers in Beta produce from past knowledge, they ascribe these changes to variations in the overall price level and not to the changes in the relative prices of the goods/services they produce.
Given this information compare the following conceptually:
1 The slopes of the short-run aggregate supply (SRAS) curve in the two countries The slopes of the short-nm Phillips curve (SRPC) in the two countries.
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