An increase in the natural unemployment rate shifts _ Phillips curve rightward.

Question

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An increase in natural unemployment rate is a structural change that affects both short-run and long-run Phillips curve. In the short-run, wages are relatively slow to adjust, so there is a trade-off between inflation and unemployment. However, in the long-run, workers and firms adjust to the new equilibrium, and the Phillips curve shifts rightward, indicating that the trade-off between inflation and unemployment becomes less favorable.

An Increase in the Natural Unemployment Rate Shifts _ Phillips