Question
Which of the following statements is / are true with respect to Phillips curve?
- It shows the trade - off between unemployment and inflation
- The downward sloping curve of Phillips curve is generally held to be valid only in the short run.
- In the long run , Phillips Curve is usually thought to be horizontal at the non accelerating inflation rate of unemployment (NAIRU)
Answer: Option A
Answer: (a)The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.
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Answer: (a)The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.
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