Economics · Macroeconomics

Which of the following best explains the shape of the Long-run Phillips Curve?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1It shifts continuously to the left as inflation expectations decrease.
2It is vertical at the natural rate of unemployment due to adjusting expectations.✓
3It is downward-sloping due to price and wage rigidities.
4It shows a stable trade-off between inflation and unemployment in the long run.

Correct answer

It is vertical at the natural rate of unemployment due to adjusting expectations.

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