The Long Run Phillips Curve: Analysis and Explanation

The video explores the long run Phillips Curve, emphasizing its vertical nature at the natural unemployment rate. It explains the role of government policies, adaptive expectations, and money illusion in shaping this curve. The video highlights the importance of supply side policies for sustainable unemployment reduction and discusses the limitations of demand side policies. It concludes with an evaluation of theoretical implications and the necessity of understanding these concepts for economic analysis.

What happens to the inflation rate when the economy returns to the natural unemployment level after a demand-side stimulus?

How can sustainable reductions in unemployment be achieved according to the text?

What are the limitations of demand-side policies in reducing the natural level of unemployment?

Summarize the key points that explain why the Phillips Curve is vertical.