In the long run ________.
A)the aggregate supply is vertical with respect to unemployment
B)the Phillips curve is vertical at a given level of expected inflation
C)the economy reaches the potential output level consistent with the natural rate of unemployment
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

In the long run, the economy reaches the potential output level consistent with the natural rate of unemployment, also known as the full employment level. This means that the aggregate supply is vertical with respect to the natural rate of unemployment and the Phillips Curve is also vertical at this level. Therefore, both options A and B are incorrect.

In the Long Run ________