Which of the following statements about the Phillips Curve are true?
- The short-run Phillips Curve suggests an inverse relationship between inflation and unemployment.
- In the long run, the Phillips Curve becomes vertical, indicating that inflation and unemployment are unrelated.
- The expectations-augmented Phillips Curve incorporates inflation expectations, which shifts the curve up or down based on changes in expected inflation.
1
Only 1 is correct
2
Only 2 is correct
3
Both 1 and 2 are correct
4
All statements are correct