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2. (1 point) Suppose the government increases its purchases. How does this change affect the Phillips curve? Does this cause
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a) If the government increases the purchases that will lead to a movement along the Philip curve as more income in hands of people will make them demand more and that will be considered as demand pull inflation. This will lead to a higher inflation and lower the unemployment in the economy.

b) A change in the minimum wage will shift the Philip curve to the right I.e.. now there will be more unemployment at every given rate of the inflation. Yes, this will increase the cost of production in the market and that will lead to a higher inflation in the market and this inflation will be considered as cost push inflation

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