The long-run Phillips curve is consistent with monetary neutrality implied by the classical dichotomy.

Question

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The long-run Phillips curve is vertical, indicating that in the long run, there is no trade-off between inflation and unemployment. This is consistent with the concept of monetary neutrality implied by the classical dichotomy, which suggests that changes in the money supply only affect nominal variables (like prices) and not real variables (like unemployment) in the long run.

The Long-Run Phillips Curve Is Consistent with Monetary Neutrality Implied