Refer to the information provided in Figure 14.6 below to answer the questions that follow.
Figure 14.6
-Refer to Figure 14.6.If unemployment is on the x-axis,which panel represents the long-run Phillips curve?

Question

Refer to the information provided in Figure 14.6 below to answer the questions that follow.
  Figure 14.6
-Refer to Figure 14.6.If unemployment is on the x-axis,which panel represents the long-run Phillips curve?

Quizplus · Accepted Answer

Panel C represents the long-run Phillips curve, as it shows a vertical line at the natural rate of unemployment, indicating that changes in inflation will not have a permanent effect on unemployment in the long run. Panels A and B show a downward-sloping curve, which represents the short-run Phillips curve that shows the inverse relationship between inflation and unemployment in the short run. Panel D shows a horizontal line at a high level of inflation, indicating that the economy is experiencing hyperinflation, which is not a sustainable long-run outcome.

Refer to the Information Provided in Figure 14