If employees and employers always accurately forecast inflation,what is the shape of the Phillips curve?
A)It is upward sloping in the short run, and horizontal in the long run.
B)It is vertical in the short run, and upward sloping in the long run.
C)It is vertical in the short run and in the long run.
D)It is downward sloping in the short run, and vertical in the long run.

Question

Quizplus · Accepted Answer

If inflation is always accurately forecasted, the Phillips curve is vertical in both the short run and the long run, as there is no trade-off between inflation and unemployment.

If Employees and Employers Always Accurately Forecast Inflation,what Is the Shape