A change in the natural unemployment rate
A) shifts only the short-run Phillips curve.
B) causes a movement along the short-run Phillips curve.
C) shifts only the long-run Phillips curve.
D) shifts both the short-run and long-run Phillips curves.

Question

Quizplus · Accepted Answer

A change in the natural unemployment rate affects both the short-run and long-run Phillips curves, shifting them because it alters the baseline level of unemployment that the economy gravitates towards in the long run.

A Change in the Natural Unemployment Rate