If the Phillips Curve Is Vertical in the Long Run

question 253

Multiple Choice

If the Phillips curve is vertical in the long run, then

• A) there is a trade-off between inflation and unemployment in the long run.
• B) the inflation rate will always be zero in the long run.
• C) the unemployment rate will be zero in the long run.
• D) there is no trade-off between inflation and unemployment in the long run.

---

Definitions:

Compounded Annually

The calculation of interest on both the initial principal and the accumulated interest from past periods once a year.

Time-value of Money

The concept that money available at the present time is worth more than the same amount in the future due to its earning capacity.

Month-end Payments

Payments that are due or processed at the end of each month.

Compounded Semi-annually

A method of calculating interest in which the interest is added to the principal sum twice a year.