If the short-run Phillips curves are nonlinear,with each Phillips curve flatter in the negative inflation range
I: maintaining zero inflation on average forces the average unemployment rate to exceed the natural rate;
II: forcing the unemployment rate to equal the natural rate must result in ever-accelerating inflation.
A) I is true; II is not.
B) II is true; I is not.
C) Both I and II are true.
D) Neither I nor II is true.

Question

If the short-run Phillips curves are nonlinear,with each Phillips curve flatter in the negative inflation range 
I: maintaining zero inflation on average forces the average unemployment rate to exceed the natural rate;
II: forcing the unemployment rate to equal the natural rate must result in ever-accelerating inflation.
A) I is true; II is not.
B) II is true; I is not.
C) Both I and II are true.
D) Neither I nor II is true.

Quizplus · Accepted Answer

If the short-run Phillips curves become flatter in the negative inflation range, it implies that the trade-off between inflation and unemployment becomes less favorable. As a result, maintaining zero inflation on average would require a higher average unemployment rate, which exceeds the natural rate (I). However, forcing the unemployment rate to equal the natural rate does not necessarily result in ever-accelerating inflation, as the Phillips curve might still slope upward in the positive inflation range, albeit with a steeper slope. Therefore, II is not true.

If the Short-Run Phillips Curves Are Nonlinear,with Each Phillips Curve