If the long-run Phillips curve shifts to the left, the economy will experience a(n) ____ short-run trade-off between inflation and unemployment.

Question

Quizplus · Accepted Answer

If the long-run Phillips curve shifts to the left, it indicates that the natural rate of unemployment is lower than previously thought due to structural changes in the economy. This means that in the short run, achieving lower unemployment will result in lower inflation, but in the long run, the economy can sustain lower unemployment without causing inflation. Therefore, the short-run trade-off between inflation and unemployment improves, making it more favourable.

If the Long-Run Phillips Curve Shifts to the Left, the Economy