The Long Run Phillips Curve (LRPC) is a vertical line at the natural rate of unemployment showing that, once inflation expectations fully adjust, there is no tradeoff between inflation and unemployment in the long run; the economy returns to its natural rate no matter the inflation rate.
The Long Run Phillips Curve is the long-run version of the Phillips curve model, and it looks completely different from the short-run version. Instead of a downward-sloping curve showing a tradeoff between inflation and unemployment, the LRPC is a vertical line sitting at the natural rate of unemployment. The message is simple. In the long run, you can have 2% inflation or 10% inflation, and unemployment ends up at the natural rate either way. Inflation and unemployment are independent in the long run.
Why vertical? Because in the long run, people catch on. If the government uses expansionary policy to push unemployment below the natural rate, inflation rises. At first workers are fooled, but eventually they build the higher inflation into their wage demands (their inflation expectations adjust). When that happens, the short run Phillips curve shifts up and unemployment drifts right back to the natural rate, just with permanently higher inflation. The LRPC is essentially the Phillips-curve twin of long-run aggregate supply. Both are vertical lines anchored at full employment, just drawn in different graph spaces.
The Phillips curve lives in AP Macro Unit 5 (Long-Run Consequences of Stabilization Policies), specifically Topic 5.2. The CED expects you to draw both the short run and long run Phillips curves on the same graph, label the natural rate of unemployment, and show how points on the SRPC correspond to inflationary or recessionary gaps in the AD-AS model. The LRPC is also the punchline of the whole unit's big idea. Demand-side policy can move the economy in the short run, but in the long run it only changes the price level, not real output or unemployment. If you understand why the LRPC is vertical, you understand why economists say 'there's no free lunch' from stimulus.
Keep studying AP Macroeconomics Unit 5
Short Run Phillips Curve (Unit 5)
The SRPC is the downward-sloping partner to the vertical LRPC. The two intersect at the natural rate of unemployment, and movements along the SRPC are short-run tradeoffs that vanish once expectations adjust and the SRPC shifts.
Natural Rate of Unemployment (Unit 2)
The natural rate (frictional plus structural unemployment) is literally where the LRPC sits on the horizontal axis. If the natural rate changes, the whole LRPC shifts. This is one of the few things that can move it.
Adaptive Expectations (Unit 5)
Adaptive expectations explain the mechanism behind the vertical LRPC. Workers update their inflation expectations based on recent experience, so any inflation surprise eventually gets baked into wages and the short-run tradeoff disappears.
Expansionary Fiscal Policy (Units 3 and 5)
The LRPC is the warning label on expansionary policy. Stimulus can push unemployment below the natural rate temporarily, but the long-run result is just higher inflation at the same natural rate of unemployment.
On multiple choice, expect questions asking what the LRPC looks like (vertical), where it's located (at the natural rate of unemployment), and what shifts it (changes in the natural rate, not inflation or demand policy). A classic stem describes expansionary policy pushing unemployment below the natural rate and asks what happens in the long run. The answer is that expectations adjust, the SRPC shifts up, and unemployment returns to the natural rate at a higher inflation rate. On FRQs, Phillips curve graphs are a recurring ask. You may need to draw a correctly labeled graph with both the SRPC and LRPC, plot a point showing an inflationary or recessionary gap, and then show the long-run adjustment. Label the vertical line LRPC and put it exactly at the natural rate, because graders check both.
The SRPC slopes downward and shows a real tradeoff. Lower unemployment comes with higher inflation, because inflation expectations are temporarily fixed. The LRPC is vertical and shows no tradeoff at all, because expectations have fully adjusted. A demand shock moves you along the SRPC; a supply shock or a change in expectations shifts the SRPC; only a change in the natural rate of unemployment moves the LRPC. If an exam question says 'in the long run,' the answer almost always involves snapping back to the LRPC.
The Long Run Phillips Curve is a vertical line at the natural rate of unemployment, meaning there is no long-run tradeoff between inflation and unemployment.
The LRPC is vertical for the same reason long-run aggregate supply is vertical; in the long run the economy produces at full employment regardless of the price level or inflation rate.
Attempts to hold unemployment below the natural rate only raise inflation, because workers' inflation expectations adjust and shift the short run Phillips curve upward.
Only changes in the natural rate of unemployment itself (like shifts in frictional or structural unemployment) move the LRPC; inflation, expectations, and demand-side policy do not.
On a correctly labeled Phillips curve graph, the SRPC and LRPC intersect at the natural rate of unemployment, and that intersection represents long-run equilibrium.
It's a vertical line at the natural rate of unemployment showing that inflation and unemployment have no tradeoff in the long run. Whatever the inflation rate, unemployment returns to its natural rate once expectations adjust. It's tested in Unit 5 of AP Macroeconomics.
Because inflation expectations fully adjust in the long run. If policy creates higher inflation to lower unemployment, workers eventually demand higher wages to match, which shifts the short run Phillips curve up and pushes unemployment back to the natural rate. Higher inflation, same unemployment, so the long-run relationship is a vertical line.
No. Expansionary policy can push unemployment below the natural rate in the short run, but the LRPC shows this is temporary. In the long run the economy returns to the natural rate with permanently higher inflation, which is exactly the point AP exam questions want you to make.
The SRPC slopes downward, showing a temporary tradeoff between inflation and unemployment while expectations are fixed. The LRPC is vertical at the natural rate, showing no tradeoff once expectations adjust. The two intersect at the natural rate of unemployment in long-run equilibrium.
Only a change in the natural rate of unemployment, such as changes in frictional or structural unemployment (for example, better job-matching technology or changes in labor force skills). Inflation, expectations, and demand-side policies shift the SRPC but never the LRPC.
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