The long-run Phillips curve
A)is vertical
B)is the same as the short-run Phillips curve
C)slopes downward
D)slopes upward
E)is horizontal

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical because in the long run, changes in the rate of inflation do not affect the rate of unemployment. Instead, the long-run Phillips curve represents the natural rate of unemployment, which is determined by structural factors such as labor market institutions, demographics, and technology.

The Long-Run Phillips Curve