Question

Differentiate between the long-run and short-run Phillips curves.

Answer 1

The long-run Phillips curve is a vertical line at the natural rate of unemployment, but the short-run Phillips curve is roughly L-shaped. The inverse relationship shown by the short-run Phillips curve only exists in the short-run; there is no trade-off between inflation and unemployment in the long run.

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Answer 2

LONG RUN

(1). The long run Philip curve in upward sloping.

(2). The long run Philip curve in vertical.

SHORT RUN

(1) The short run Philip curve in downward sloping.

(2) The short run Philip curve in upward

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