Can someone explain the logic behind when you move along the short term expected inflataion curve, and when do you shift it? and what it all means? Thanks
movement: if actual inflation is greater/less then expected inflation is a movement along. shift: when governments intervene to control inflation it will be relfected in wage contracts and other prices and will be a shift downward to a new SR phillips curve LRPC is independant of inflation and unemployment, however it will shift will GDP
I have trouble with this too. I know a ‘shift’ occur when expectations change. Movement along the curve has to do with changes in rates but not expectation.
if actual inflation is less then expected, then inflation decreases and unemployment rises if actual inflation is more then expected, then inflation increases and unemployment decreaess both are movements along the SRPC