The "long-run Phillips Curve" is the set of points for which
A)expected inflation is zero.
B)expected inflation is equal to actual inflation.
C)actual inflation is zero.
D)actual inflation is equal to expected inflation plus the growth rate of nominal wages.
E)actual inflation is equal to expected inflation minus the growth rate of nominal wages.

Question

Quizplus · Accepted Answer

The long-run Phillips Curve is vertical at the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment. This condition is met when expected inflation is equal to actual inflation, as individuals and firms adjust their expectations over time.

The "Long-Run Phillips Curve" Is the Set of Points for Which