Which of the following would shift the long-run Phillips curve to the right?
A)expansionary fiscal policy
B)an increase in the inflation rate
C)increases in unemployment compensation
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Increases in unemployment compensation lead to lower incentive to work, which could increase the natural rate of unemployment in the long run. This would shift the long-run Phillips curve to the right, indicating that there is a higher level of unemployment for any given level of inflation. Expansionary fiscal policy and an increase in the inflation rate generally shift the short-run Phillips curve to the right, but they do not have a long-term effect on the natural rate of unemployment or the position of the long-run Phillips curve.

Which of the Following Would Shift the Long-Run Phillips Curve