AP Macroeconomics / Unit 5: Long-Run Consequences of Stabilization Policies
5.2 The Phillips Curve
Notes
- Short-run Phillips curve: inverse trade-off between inflation and unemployment.
- Long-run Phillips curve: vertical at the natural rate.
- SRAS shifts left ↔ SRPC shifts right.
Practice
An increase in AD moves the economy along the SRPC to:
Trade-off.
The long-run Phillips curve is vertical at:
No long-run trade-off.
A supply shock (SRAS left) shifts the SRPC:
Higher inflation at every unemployment rate.
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