Monetary Economics

a. From what you learned in class, what relationship between unemployment and inflation does the Phillips Curve usually describe? In that context, what does the author of the article mean when they claim that the Phillips Curve “has become strangely flat”? b. In the article, the author emphasizes the role that wages play in the Phillips Curve. Why are wages an important link connecting low unemployment to high prices? Explain. c. Expectations about monetary policy and inflation play a big role in our understanding of the Phillips Curve. The article describes Milton Friedman’s argument why inflation expectations matter. In class, we made a somewhat different argument why expectations about monetary policy are important. Describe and compare both arguments. Which one is better suited to explain “a flattened curve”? d. The article cites a number of different reasons why the Phillips Curve might seem (or be) flat. Pick one and explain it in your own words.

Sample Solution

that people rather stay in their comfort zone and settle with the knowledge we already know and stick with comfortable allusions and ask us if we are willing to step out and understand the real world no matter the cost of friends and family to gain new knowledge about this world we have no idea about.
My opinion about this analogy created by these philosophers are that the cave represented most of the people in the world today that is trapped and doesn’t know the half of what this world consists of. I believe I am one of these people that knows about life based on what happens in my shell and what I am taught by those around me. I believe I need to go out and experience what other forms of life can teach me and no matter if I get hurt or lose people along the way I know it would help me grow as an individual. The shadows also represented to me in my opinion what were supposed to think from childhood such as having to go to school to get a good job ad have a lot of money to be happy or getting in relationships to be considered loved and happy. I believe it’s the majority way of thinking because were so focused on what each other thinks and are in this shell trying to compete against one another or be like one another because that’s what were supposed to do. I think if we each were to step out this cave, we can each be unique individuals and see life as beauty and happiness that comes within ourselves and not money or relationships. I believe us young ones can also mature faster by figuring out life ourselves and not be taught and condoned to how life should be or think the truth comes from people that experienced things and are passed down to the next generation.
The Allegory Cave concept was essential on explaining how people understand the world based off their small ways of thinking and provided reasoning as to why people should step out and face reality and not be so comfortable with where they stand. I believe its an important concept that everyone should follow because it would also help individuals grow and not be so quick to have hard times or disappointment because they will realize there is more to life than we think.

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