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Question 2 Answer both parts. (a) Explain the formation of expected inflation. Discuss the differences between the original Phillips curve and its expectations augmented version.
Question 2
Answer both parts.
(a) Explain the formation of expected inflation. Discuss the differences between the original
Phillips curve and its expectations augmented version.
[20 marks]
(b) "The Phillips curve exists as long as governments can refrain from exploiting it". Discuss.
[30 marks]
[Total 50 marks]
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