Which of the following is correct concerning the long-run Phillips curve?
A)Its position is determined primarily by monetary factors.
B)If it shifts right,long-run aggregate supply shifts right.
C)It cannot be changed by any government policy.
D)Its position depends on the natural rate of unemployment.

Question

Quizplus · Accepted Answer

The long-run Phillips curve shows the relationship between inflation and unemployment in the long run. It is based on the natural rate of unemployment which is determined by structural factors such as technology, demographics, and institutions. Therefore, its position depends on the natural rate of unemployment, hence Option D is the correct choice. Monetary policy actions can only affect the short-run Phillips curve while fiscal policy actions may have a limited impact on it. The position of the long-run Phillips curve can only be changed by structural policies aimed at increasing productivity or changing demographics, for example.

Which of the Following Is Correct Concerning the Long-Run Phillips