Which of the following characterizes the long-run Phillips curve?
A)Its position is determined primarily by monetary factors.
B)If it shifts right, long-run aggregate supply shifts right.
C)It cannot be changed by any government policy.
D)Its position depends on the natural rate of unemployment.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is characterized by the natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU). This is the rate of unemployment that is consistent with a stable inflation rate in the long run. Therefore, if the natural rate of unemployment changes, the position of the long-run Phillips curve will also change. None of the other options correctly characterize the long-run Phillips curve.

Which of the Following Characterizes the Long-Run Phillips Curve