The long-run Phillips curve is graphed as a
A) horizontal line at the expected level of inflation.
B) vertical line at the natural unemployment rate.
C) curve that slopes downward to the right.
D) curve that slopes upward to the right.
E) a straight line with a 45 degree slope.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is represented by a vertical line at the natural rate of unemployment, indicating that in the long-run, changes in inflation have no effect on the unemployment rate. This is because in the long-run, wages and prices adjust to equate supply and demand in the labor market, resulting in the natural rate of unemployment.

The Long-Run Phillips Curve Is Graphed as a