The long-run Phillips curve is
A) vertical at potential GDP.
B) the horizontal sum of the short-run Phillips curves.
C) vertical at the natural unemployment rate.
D) the vertical sum of the short-run Phillips curves.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment. This concept reflects the idea that the economy eventually adjusts to any unemployment rate below or above the natural rate, bringing inflation expectations in line with actual inflation, thus stabilizing the unemployment rate at its natural level.

The Long-Run Phillips Curve Is