The short- run Phillips curve and the long- run Phillips curve intersect at the and
)
A) expected inflation rate; the natural unemployment rate
B) expected inflation rate; the expected unemployment rate
C) natural inflation rate; the expected employment rate
D) expected inflation rate; the expected employment rate

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows the relationship between inflation and unemployment in the short run, implying that reducing unemployment will result in higher inflation, whereas increasing unemployment will result in lower inflation. On the other hand, the long-run Phillips curve is vertical at the natural rate of unemployment, implying that in the long run, changes in inflation do not affect unemployment.

Therefore, the short-run Phillips curve and long-run Phillips curve intersect at the expected inflation rate and the natural unemployment rate, where actual inflation equals expected inflation, and unemployment matches its natural rate.

The Short- Run Phillips Curve and the Long- Run Phillips