Monetary policy has ________ impact on the long-run Phillips curve.

Question

Quizplus · Accepted Answer

The long-run Phillips curve, which represents the trade-off between inflation and unemployment in the long run, is determined by structural factors in the economy such as productivity, labor market institutions, and expectations. Monetary policy can temporarily affect the location of the economy on the short-run Phillips curve, but it cannot permanently influence the long-run Phillips curve. Therefore, monetary policy has no impact on the long-run Phillips curve.

Monetary Policy Has ________ Impact on the Long-Run Phillips Curve