The long-run Phillips Curve is vertical at:
A) price level.
B) the natural rate of unemployment.
C) every level of real GDP.
D) the rate of maximum taxation.

Question

Quizplus · Accepted Answer

The long-run Phillips Curve shows the relationship between inflation and unemployment in the long run, when all temporary factors affecting either of these variables have been eliminated. In the long run, changes in the rate of inflation have no effect on the rate of unemployment. The natural rate of unemployment is the rate of unemployment at which inflation is stable or constant over time. Therefore, the long-run Phillips Curve is vertical at the natural rate of unemployment. The other choices (A, C, and D) are not correct because they do not represent the relationship between inflation and unemployment in the long run.

The Long-Run Phillips Curve Is Vertical At