The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the economy is
A) at full employment.
B) in expansion.
C) in recession.
D) at full inflation.
E) away from potential GDP.

Question

Quizplus · Accepted Answer

The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the economy is at full employment, implying that there is no tradeoff between inflation and unemployment in the long run, and the economy is operating at its potential GDP.

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