Only the short-run Phillips curve is downward sloping because: a in the long run, prices adjust, eliminating the relationship between inflation and unemployment. b central banks only have influence over the economy in the long run. c central banks have no influence over the economy in the short run. d in the long run, prices are sticky, eliminating the relationship between inflation and unemployment. e long-run effects of monetary policy are negated by fiscal policy.

Question

Fleming

Business

12 April, 10:16

Only the short-run Phillips curve is downward sloping because: a in the long run, prices adjust, eliminating the relationship between inflation and unemployment. b central banks only have influence over the economy in the long run. c central banks have no influence over the economy in the short run. d in the long run, prices are sticky, eliminating the relationship between inflation and unemployment. e long-run effects of monetary policy are negated by fiscal policy.

+4

Answers (1)

Know the Answer?

Casey Dominguez · Answer 1

a in the long run, prices adjust, eliminating the relationship between inflation and unemployment

Explanation:

Philip's curve states that there is an inverse relationship between inflation and unemployment in the short run. However, in the long run, workers and consumers adapt to the new environment.