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

Question

Quizplus · Accepted Answer

The long-run Phillips curve illustrates the relationship between inflation and unemployment when the actual inflation rate equals the expected inflation rate, indicating that in the long run, there is no trade-off between inflation and unemployment.

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