A vertical long-run Phillips curve is consistent with which of the following?
A) the principle of monetary neutrality
B) unemployment depends on money growth
C) a natural rate of unemployment that depends on the inflation rate
D) a downward-sloping aggregate-demand curve

Question

Quizplus · Accepted Answer

The principle of monetary neutrality posits that changes in the money supply only affect nominal variables in the long run, not real variables such as output or unemployment. A vertical long-run Phillips curve implies that there is no trade-off between inflation and unemployment in the long run, aligning with the principle of monetary neutrality.

A Vertical Long-Run Phillips Curve Is Consistent with Which of the Following