Topic 12: Stabilization Policy, Inflation & Unemployment

Key Points

  1. Understand the goal of stabilization policy
  2. Analyze how monetary and fiscal policy can be used for stabilization
  3. Know the concept of policy lags and how the lags differ for fiscal and monetary policy
  4. Understand the short-run Phillips curve relationship between inflation and unemployment
  5. Analyze the economics that makes the long-run run Phillips curve vertical

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