AP MacroeconomicsFinancial Sector & Loanable Funds
Long-Run Phillips Curve
The long-run Phillips curve is vertical at the natural rate of unemployment, showing no permanent trade-off between inflation and unemployment.
In the long run, expectations adjust, so trying to push unemployment below the natural rate only raises inflation. It corresponds to long-run aggregate supply at potential output. Only supply-side changes can shift it.
Formula / Example
Vertical at the natural rate of unemployment (NRU).
Interactive graph
Phillips Curve →
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Study module
Unemployment & Inflation →
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