Along the long-run Phillips curve,
A)the economy is at an unemployment level that corresponds to the potential output level
B)expectations have not fully adjusted
C)policy makers can have lower inflation only with higher unemployment
D)a cut in taxes will lower inflation
E)a tax cut will increase unemployment

Question

Quizplus · Accepted Answer

In the long run, the Phillips curve is vertical, indicating that the economy is at the natural rate of unemployment, which corresponds to the potential output level.

Along the Long-Run Phillips Curve