A change in the natural unemployment rate___________ .
A) causes a movement along the short-run Phillips curve
B) shifts both the short-run and long-run Phillips curves
C) shifts only the short-run Phillips curve
D) shifts only the long-run Phillips curve

Question

Quizplus · Accepted Answer

A change in the natural unemployment rate is typically the result of structural changes in the economy such as technological improvements or changes in labor market institutions. These changes can shift both the short-run and long-run Phillips curves. In the short-run, the Phillips curve may shift in the opposite direction of the change in the natural rate due to imperfect information and adjustment processes. However, in the long-run, the Phillips curve will shift in the same direction as the change in the natural rate.

A Change in the Natural Unemployment Rate___________