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An increase in the natural unemployment rate shifts both the long-run Phillips curveand the short-run Phillips...

An increase in the natural unemployment rate shifts both the long-run Phillips curveand the short-run Phillips curve rightward. T or F

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Answer- False

''An increase in the natural unemployment rate shifts both the long-run Phillips curve and the short-run Phillips curve rightward.'' this statement is False. Because short-run Phillips curve represents a combination of unemployment and inflation that an economy might experience given current expectations about inflation. Decrease in aggregate supply shifts the short run Phillips curve to the right and they include increase expected inflation. But the long-run Phillips curve is vertical at the natural rate of unemployment, there is no relationship between the unemployment rate and inflation in the long run. Anything that changes the natural rate of unemployment will shift the long run phillips curve. An increase in the natural unemployment rate shifts only the long-run Phillips curve to the right, not the short-run Phillips curve.

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