Question

Explain the relationship between inflation and unemployment according to the long-run Phillips Curve.?

Explain the relationship between inflation and unemployment according to the long-run Phillips Curve.?

Homework Answers

Answer #1

There is no relation between inflation and unemployment in the long run because there is a vertical line in the long-run Phillips curve at the natural rate of unemployment. There is no swap between inflation and unemployment as per economists.
There is no relationship between inflation and unemployment in the long run. A vertical line is shown on the Phillips curve at the natural rate of unemployment. Endeavor to change rates of unemployment only helps the economy to move up and down this vertical line.

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