Does the value of the output gap increase or decrease

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1. When the Federal Reserve raises the real interest rate, does the economy move up or down the IS curve, and does the value of the output gap increase or decrease?

2. What is the Phillips curve? Why is there an inverse relationship between inflation and unemployment? On the Phillips curve, when the unemployment rate equals the natural rate of unemployment, what does the actual inflation rate equal?

Reference no: EM131302702

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