Author Question: What impact does expansionary monetary policy have on the short-run Phillips curve if consumers and ... (Read 94 times)

DelorasTo · **on:** Jun 29, 2018

What impact does expansionary monetary policy have on the short-run Phillips curve if consumers and firms expect the expansionary monetary policy to increase inflation?

A) The short-run Phillips curve is not affected by expansionary monetary policy.
B) The short-run Phillips curve shifts down.
C) The short-run Phillips curve shifts up.
D) The short-run Phillips curve becomes the long-run Phillips curve.

Question 2

What does it mean to say that economists use the scientific method? How do economists distinguish between models that work and those that don't?

What will be an ideal response?

upturnedfurball · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The scientific method is the name for the ongoing process that economists and other scientists use to develop models of the world, test those models with data and evaluate how well they predict or describe behavior. While this process may not reveal the true' model of the world, it does help in identifying models that are useful in understanding the world.
In order to decide whether models make accurate predictions or not, economists test them against real-world data. Data are facts, measurements, or statistics that describe the world. This process of testing models against data is called empiricism.