Assume that the labor supply in an economy is fixed: LS = 240. The labor demand depends on real wages, in the following form: DL = 250 - 2(WP). The production function is: Y = 10L, the short run aggregate supply curve is Y = 2700 + 100(h - h0). For simplicity, the natural rate of unemployment is zero. Derive the short-run Phillips curve and the long-run Phillips curve!

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The Phillips Curve is a connection among unemployment and swelling found by Professor AWPhillips The relationship depended on perceptions he made of u... View the full answer