Which of the following statements about the long-run Phillips curve is NOT accurate?
A) Unemployment is at the natural rate.
B) Employers and workers have the time and ability to adjust fully to unexpected changes in aggregate demand.
C) The only choices for policymakers are different levels of inflation.
D) Inflation and unemployment are inversely related.

Question

Which of the following statements about the long-run Phillips curve is NOT accurate?  
A) Unemployment is at the natural rate. 
B) Employers and workers have the time and ability to adjust fully to unexpected changes in aggregate demand. 
C) The only choices for policymakers are different levels of inflation. 
D) Inflation and unemployment are inversely related.

Quizplus · Accepted Answer

In the long run, the Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment. This means that inflation and unemployment are not inversely related in the long run, as the economy adjusts to its natural rate of unemployment regardless of the inflation rate.

Which of the Following Statements About the Long-Run Phillips Curve