The long-run Phillips curve is ____ at the ____?
Correct answer: D. vertical equilibrium rate of unemployment
- A. horizontal, natural rate of inflation
- B. horizontal natural rate of unemployment
- C. vertical natural rate of inflation
- D. vertical equilibrium rate of unemployment
Explanation
In the long run, unemployment returns to its natural or equilibrium rate regardless of the inflation rate, so the Phillips curve is vertical. Option d uses equilibrium rate of unemployment as the equivalent term.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
The costs of inflation are ?
An advocate of the classical model of the economy would claim that unemployment is created when the ____ is above its equilibrium level in the ______?
Possible causes of involuntary unemployment are ?
Governments may contribute to inflationary pressure because of building up large ?
In the events of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely ?
The Keynesian model is a good guide to ____ behavior and the classical model describes behavior in ______?