The long-run Phillips curve is
A) horizontal at the expected inflation rate.
B) vertical at the natural unemployment rate.
C) horizontal at the actual inflation rate.
D) vertical at the actual inflation rate.

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 reflects the idea that in the long run, the economy tends to return to the natural rate of unemployment, regardless of the inflation rate.

The Long-Run Phillips Curve Is