-Comparing the short-run Phillips curve and the long-run Phillips curve, we see that there is
A) only a long-run tradeoff between inflation and unemployment but not a short-run tradeoff.
B) no relationship between the two curves.
C) only a short-run tradeoff between inflation and unemployment but not a long-run tradeoff.
D) no tradeoff in either curve.
E) a tradeoff in both curves.

Question

-Comparing the short-run Phillips curve and the long-run Phillips curve, we see that there is
A) only a long-run tradeoff between inflation and unemployment but not a short-run tradeoff. 
B) no relationship between the two curves. 
C) only a short-run tradeoff between inflation and unemployment but not a long-run tradeoff. 
D) no tradeoff in either curve. 
E) a tradeoff in both curves.

Quizplus · Accepted Answer

The short-run Phillips curve suggests a tradeoff between inflation and unemployment, meaning that reducing unemployment in the short term can lead to higher inflation. However, the long-run Phillips curve is vertical, indicating that there is no tradeoff between inflation and unemployment in the long run; the economy tends to return to the natural rate of unemployment regardless of the inflation rate.

-Comparing the Short-Run Phillips Curve and the Long-Run Phillips Curve