The short-run Phillips curve and the long-run Phillips curve intersect at the ________ and ________.
A) expected inflation rate; the expected unemployment rate
B) expected inflation rate; the natural unemployment rate
C) natural inflation rate; the expected employment rate
D) expected inflation rate; the expected employment rate

Question

Quizplus · Accepted Answer

The short-run Phillips curve and the long-run Phillips curve intersect at the expected inflation rate and the natural unemployment rate. This intersection represents the point where the economy's actual inflation matches expected inflation, and unemployment is at its natural rate, unaffected by short-term cyclical factors.

The Short-Run Phillips Curve and the Long-Run Phillips Curve Intersect