If the natural unemployment rate increases, then the long- run Phillips curve _ and the short- run Phillips curve .
A) shifts leftward; shifts rightward
B) does not shift; shifts rightward
C) shifts rightward; shifts leftward
D) shifts rightward; shifts rightward

Question

Quizplus · Accepted Answer

The long-run Phillips curve represents the natural rate of unemployment, so if the natural unemployment rate increases, the long-run Phillips curve shifts rightward. The short-run Phillips curve also shifts rightward because higher natural unemployment affects expectations and the trade-off between inflation and unemployment.

If the Natural Unemployment Rate Increases, Then the Long- Run