Before discovering that the short-run Phillips curve does not show the true long-run situation,policy makers were successful in trying to bring the economy to the zero-inflation,zero-unemployment point on the short-run curve.

Question

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The short-run Phillips curve suggests a trade-off between inflation and unemployment, but attempts to reach a point of zero inflation and zero unemployment simultaneously have not been successful. In the long run, the Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment, thus making the goal of zero inflation and zero unemployment simultaneously unachievable through traditional demand-management policies.

Before Discovering That the Short-Run Phillips Curve Does Not Show