In the long run,the Phillips Curve
A) slopes downward
B) slopes upward
C) shifts outward indefinitely
D) is vertical
E) is horizontal

Question

Quizplus · Accepted Answer

In the long run, the Phillips Curve is vertical, which means there is no trade-off between inflation and unemployment, and the economy operates at its natural rate of unemployment. The long run Phillips Curve is based on the idea that there is a level of unemployment in the economy that can be sustained without causing inflationary pressures. This level is called the natural rate of unemployment or the non-accelerating inflation rate of unemployment (NAIRU). As the economy approaches full employment, wages and prices will rise, leading to higher inflation but no reduction in unemployment.

In the Long Run,the Phillips Curve