The long-run Phillips curve suggests that changing the rate of unemployment in the economy has no impact on the inflation rate.

Question

Quizplus · Accepted Answer

According to the long-run Phillips curve, the unemployment rate and inflation rate are only temporarily related in the short-run. In the long-run, the unemployment rate returns to its natural rate and changes in the unemployment rate have no impact on the inflation rate. Therefore, the statement is true.

The Long-Run Phillips Curve Suggests That Changing the Rate of Unemployment