If the long-run Phillips curve is vertical, then any government policy designed to lower:
A) unemployment will not change the unemployment rate and only increase the inflation rate.
B) unemployment will work leaving the inflation rate unchanged.
C) inflation will cause employment to rise.
D) unemployment will work causing the inflation rate to fall.

Question

Quizplus · Accepted Answer

If the long-run Phillips curve is vertical, it means that in the long-run, there is no trade-off between inflation and unemployment. Thus, any government policy designed to lower unemployment will only lead to an increase in the inflation rate, without affecting the unemployment rate. This is why option A is the correct answer.

If the Long-Run Phillips Curve Is Vertical, Then Any Government