The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on
A)the natural rate of unemployment and monetary growth.
B)the natural rate of unemployment,but not monetary growth.
C)monetary growth,but not the natural rate of unemployment.
D)neither monetary growth nor the natural rate of unemployment.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical at the natural rate of unemployment, which is determined by structural forces in the economy and is not impacted by monetary policy in the long run. The long-run aggregate supply curve is also vertical, as it represents the potential output of the economy based on its resource endowments and technology, and is not affected by monetary growth in the long run. Therefore, the position of both curves depends on the natural rate of unemployment, but not on monetary growth.

The Position of the Long-Run Phillips Curve and the Long-Run