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What are two potential caveats that are not reflected in the interaction between the IS-MP and Phillips framework? Actual output can suffer changes that may
What are two potential caveats that are not reflected in the interaction between the IS-MP and Phillips framework? Actual output can suffer changes that may not be reflected in the model if potential output also moves with it. The Phillips curve only factors in expected inflation. The IS-MP model does not factor in changes in output due to changes in input prices. IS-MP has the price level on its vertical axis
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