Which of the following would shift the long-run Phillips curve to the right?
A)Expansionary fiscal policy
B)An increase in the inflation rate
C)Increases in unemployment compensation
D)Expansionary monetary policy.

Question

Quizplus · Accepted Answer

Increases in unemployment compensation can shift the long-run Phillips curve to the right because it raises the natural rate of unemployment. This is because higher unemployment benefits may reduce the incentive for unemployed individuals to find new jobs quickly, potentially increasing the natural or non-accelerating inflation rate of unemployment (NAIRU).

Which of the Following Would Shift the Long-Run Phillips Curve