The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to reduce unemployment in the short run, the only effect of such policies in the long run is to raise inflation.

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The long-run Phillips Curve is vertical, indicating that there is no trade-off between inflation and unemployment in the long run. Stimulative policies may temporarily reduce unemployment, but eventually, they only lead to higher inflation without affecting the natural rate of unemployment.

The Policy Implication of the Long-Run Phillips Curve Is That