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

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical at the natural unemployment rate, which is determined by structural factors such as demographics, technology, and institutional arrangements. Therefore, the position of the long-run Phillips curve is not affected by the inflation rate, the quantity of money, or the expected inflation rate, which affect the short-run Phillips curve.

The Position of the Long-Run Phillips Curve Is Determined by