The long- run Phillips curve
A) is vertical.
B) slopes downward.
C) slopes upward.
D) is horizontal.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical because it depicts the relationship between unemployment and inflation in the long run, when there are no short-run fluctuations or surprises in the economy. In the long run, changes in the level of aggregate demand lead to changes in the price level but not changes in the level of output or employment. Therefore, the long-run Phillips curve is vertical at the natural rate of unemployment, indicating that there is no tradeoff between unemployment and inflation in the long run.

The Long- Run Phillips Curve