According to the analysis of the short run and long run Phillips curves in the text, a persistent inflation rate of 10% per year:
A)Would keep unemployment below the natural rate.
B)Would keep unemployment above the natural rate.
C)Would result in unemployment at the natural rate of unemployment.
D)Is consistent with any of the above scenarios.

Question

According to the analysis of the short run and long run Phillips curves in the text, a persistent inflation rate of 10% per year:
A)​Would keep unemployment below the natural rate.
B)​Would keep unemployment above the natural rate.
C)​Would result in unemployment at the natural rate of unemployment.
D)​Is consistent with any of the above scenarios.

Quizplus · Accepted Answer

In the long run, the Phillips curve is vertical, indicating that unemployment returns to the natural rate regardless of the inflation rate. Thus, a persistent inflation rate of 10% would result in unemployment at the natural rate.

According to the Analysis of the Short Run and Long