The long-run Phillips curve indicates that
A)potential GDP can never be achieved.
B)any inflation rate is possible at the natural unemployment rate.
C)there is no way to control the inflation rate in the long run.
D)there is a tradeoff between the inflation rate and the unemployment rate in the long-run.
E)any unemployment rate is possible at the natural inflation rate.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, indicating that in the long run, the economy can achieve any inflation rate at this natural unemployment rate, as inflation expectations adjust.

The Long-Run Phillips Curve Indicates That