What does a vertical Phillips curve in the long run imply?
A)In the long run, the rate of unemployment will converge toward zero.
B)Higher inflation does not permanently reduce the rate of unemployment.
C)Higher inflation increases the rate of unemployment.
D)Higher inflation lowers the rate of unemployment.

Question

What does a vertical Phillips curve in the long run imply?
A)​In the long run, the rate of unemployment will converge toward zero.
B)​Higher inflation does not permanently reduce the rate of unemployment.
C)​Higher inflation increases the rate of unemployment.
D)​Higher inflation lowers the rate of unemployment.

Quizplus · Accepted Answer

A vertical Phillips curve in the long run implies that there is no tradeoff between inflation and unemployment. Higher inflation may reduce unemployment in the short run, but in the long run, it does not affect the rate of unemployment. Thus, higher inflation does not permanently reduce the rate of unemployment.

What Does a Vertical Phillips Curve in the Long Run