The short-run Phillips curve is _______ and the long-run Phillips curve is _______.
A) downward sloping; vertical
B) downward sloping; horizontal
C) upward sloping; vertical
D) upward sloping; horizontal

Question

Quizplus · Accepted Answer

The short-run Phillips curve is downward sloping, indicating an inverse relationship between inflation and unemployment in the short run. In contrast, the long-run Phillips curve is vertical, indicating that there is no relationship between inflation and unemployment in the long run, as the economy will return to its natural rate of unemployment over time.

The Short-Run Phillips Curve Is _______ and the Long-Run Phillips