The long- run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the
A)real interest rate is zero.
B)inflation rate is zero.
C)actual inflation rate equals the expected inflation rate.
D)real interest rate equals the nominal interest rate.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment in the long run. This occurs when the actual inflation rate equals the expected inflation rate, meaning that inflation is fully anticipated and does not affect unemployment.

The Long- Run Phillips Curve Shows the Relationship Between the Inflation