The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to
reduce unemployment in the short run, the only effect of such policies in the long run is to raise
inﬂation.

Question

Quizplus · Accepted Answer

The long-run Phillips Curve suggests that there is a trade-off between unemployment and inflation in the short run, but in the long run, there is no such trade-off. Therefore, stimulative policies may reduce unemployment in the short run but only lead to higher inflation in the long run.

The Policy Implication of the Long-Run Phillips Curve Is That