One implication of the long-run Phillips curve is that

Question

Quizplus · Accepted Answer

The long-run Phillips curve suggests that in the long run, there is no trade-off between inflation and unemployment. This means that policies aimed at keeping unemployment below its natural rate will eventually lead to accelerating inflation, as businesses face higher labor costs and pass them on to consumers in the form of higher prices. This is known as the inflationary spiral. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect because they do not accurately reflect the implications of the long-run Phillips curve.

One Implication of the Long-Run Phillips Curve Is That