If the natural unemployment rate increases, then the short-run Phillips curve shifts ________ and the long-run Phillips curve shifts ________.
A) rightward; rightward
B) rightward; leftward
C) leftward; rightward
D) leftward; leftward

Question

Quizplus · Accepted Answer

The short-run Phillips curve shifts rightward because with a higher natural rate of unemployment, the same inflation rate is now associated with higher unemployment. The long-run Phillips curve shifts rightward as well because it is vertical at the natural rate of unemployment, which has increased.

If the Natural Unemployment Rate Increases, Then the Short-Run Phillips