If the long-run Phillips curve shifts to the right,for any given rate of money growth and inflation the economy will have

Question

Quizplus · Accepted Answer

The long-run Phillips curve shows the relationship between unemployment and inflation in the long run. If the long-run Phillips curve shifts to the right, it means that the natural rate of unemployment has increased. This implies that the economy can only sustain a higher level of unemployment for a given rate of inflation. Thus, for any given rate of inflation and money growth, the economy will have higher unemployment and lower output. Hence, Option A is the correct answer.

If the Long-Run Phillips Curve Shifts to the Right,for Any