The long-run Phillips curve is a vertical line at the natural rate of unemployment, analogous to the long-run aggregate demand curve at potential real GDP.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is indeed a vertical line, but it represents the relationship between inflation and unemployment, indicating that there is no trade-off between inflation and unemployment in the long run. The long-run aggregate supply curve, not the demand curve, is vertical at potential real GDP, reflecting the economy's maximum sustainable output.

The Long-Run Phillips Curve Is a Vertical Line at the Natural