What does the long-run Phillips curve represent?
A) It represents the fact that inflation is consistent with many unemployment rates.
B) It represents the fact that inflation will NOT influence unemployment in the long run.
C) It represents a situation where expected inflation can never equal actual inflation.
D) It represents a situation where unemployment occurs in the short run, but NOT in the long run.

Question

What does the long-run Phillips curve represent?  
A) It represents the fact that inflation is consistent with many unemployment rates. 
B) It represents the fact that inflation will NOT influence unemployment in the long run. 
C) It represents a situation where expected inflation can never equal actual inflation. 
D) It represents a situation where unemployment occurs in the short run, but NOT in the long run.

Quizplus · Accepted Answer

The long-run Phillips curve represents the fact that in the long run, inflation will not influence unemployment. This is because the economy will eventually adjust to the natural rate of unemployment, which is determined by non-monetary factors. This means that there is a vertical long-run Phillips curve, where any changes in inflation do not affect the level of unemployment.

What Does the Long-Run Phillips Curve Represent