Which of the following does the long-run Phillips curve tell us?
A) That output can be below potential in the long run
B) That the unemployment rate can take on any value in the long run
C) That output can be maintained above potential in the long run
D) That unemployment will return to the natural rate in the long run
E) That the inflation rate cannot rise above 10 percent in the long run.

Question

Quizplus · Accepted Answer

The long-run Phillips curve shows that in the long run, the unemployment rate will return to its natural rate. This means that any deviation from the natural rate of unemployment will only be temporary, and eventually, the economy will return to its long-run equilibrium. The other choices are not accurate descriptions of the long-run Phillips curve.

Which of the Following Does the Long-Run Phillips Curve Tell