The long- run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the
A) actual inflation rate equals the expected inflation rate.
B) real interest rate equals the nominal interest rate.
C) real interest rate is zero.
D) inflation rate is zero.

Question

Quizplus · Accepted Answer

The long-run Phillips curve represents the relationship between unemployment and inflation when the actual inflation rate equals the expected inflation rate. This suggests that in the long run, the economy will always return to its natural rate of unemployment, regardless of the inflation rate. Therefore, only option A is correct.

The Long- Run Phillips Curve Shows the Relationship Between the Inflation