The position of the long- run Phillips curve is determined by
A) the level of interest rates.
B) the inflation rate.
C) the quantity of money.
D) the natural unemployment rate.

Question

Quizplus · Accepted Answer

The position of the long-run Phillips curve is determined by the natural unemployment rate, which represents the level of unemployment that exists when the economy is in equilibrium and there is no pressure for inflation to rise or fall. This rate is determined by structural factors such as demographics, institutional arrangements, and labor market policies, and is not affected by monetary or fiscal policy. Therefore, the correct answer is D.

The Position of the Long- Run Phillips Curve Is Determined