The long-run Phillips curve would shift to the right if
A)the money supply growth rate decreased or if labor markets become more flexible.
B)the money supply growth rate decreased,but not if labor markets become more flexible.
C)labor markets become more flexible,but not if the money supply growth rate decreased.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical, indicating no trade-off between inflation and unemployment in the long run. It shifts due to changes in the natural rate of unemployment, not due to changes in money supply growth or labor market flexibility.

The Long-Run Phillips Curve Would Shift to the Right If