short run, therefore, monetary changes lead to unexpected fluctuations in output,
prices,
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the Phillips curve that Phillips, Samuelson,
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Yet the Fed's ability to create unexpected inflation by increasing the money
supply exists only in the short run. In the long run, people come to expect what-
ever inflation rate the Fed chooses to produce. Because perceptions, wages, and
prices will eventually adjust to the inflation rate,
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curve is vertical. In this case,
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