The long-run Phillips curve shows the relationship between
A) the price level and unemployment in the long run.
B) inflation and unemployment when expected inflation does not change.
C) inflation and unemployment when expected inflation equals the actual inflation.
D) the price level and real GDP in the long run.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment when expected inflation equals actual inflation. This reflects the natural rate of unemployment, where inflation does not affect unemployment in the long run.

The Long-Run Phillips Curve Shows the Relationship Between