The lack of a long-run tradeoff between the unemployment rate and the inflation rate means the long-run Phillips curve is
A) upward sloping.
B) horizontal.
C) vertical.
D) downward sloping.
E) U-shaped, with higher inflation initially decreasing unemployment and then increasing it back to the natural unemployment rate.

Question

Quizplus · Accepted Answer

The lack of a long-run tradeoff between the unemployment rate and the inflation rate implies that in the long run, changes in the inflation rate do not affect the natural rate of unemployment. This means that the long-run Phillips curve is vertical, indicating that changes in the inflation rate have no effect on the unemployment rate.

The Lack of a Long-Run Tradeoff Between the Unemployment Rate