The Policy Implication of the Long-Run Phillips Curve Is That

question 23

True/False

The policy implication of the long-run Phillips Curve is that, while stimulative policies may work to reduce unemployment in the short run, the only effect of such policies in the long run is to raise inflation.

---

Definitions:

Consumers

Individuals or groups who use goods and services generated within the economy.

Tax

Mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Good

A tangible item or service that can be bought, sold, or traded.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive.