The long-run Phillips curve (LRPC) is a vertical line at the natural rate of unemployment, showing that in the long run there is no trade-off between inflation and unemployment because inflation expectations fully adjust (AP Macro Topic 5.2, EK MOD-3.A.3).
The long-run Phillips curve (LRPC) is a vertical line drawn at the natural rate of unemployment. That vertical shape is the whole point. In the long run, the economy returns to its natural rate of unemployment no matter what the inflation rate is, so there is no lasting trade-off between inflation and unemployment (EK MOD-3.A.3). Think of the LRPC as the Phillips-curve twin of the long-run aggregate supply curve. LRAS is vertical at full-employment output, and the LRPC is vertical at the unemployment rate that goes with that output.
Why does the trade-off disappear? Inflation expectations. In the short run, policymakers can push unemployment below the natural rate by stimulating demand, which moves the economy up along the short-run Phillips curve (SRPC). But once workers and firms expect the higher inflation, the SRPC shifts up and unemployment drifts back to its natural rate, now with higher inflation. Long-run equilibrium happens where the SRPC intersects the LRPC (EK MOD-3.A.4). Points to the left of that intersection signal an inflationary gap, and points to the right signal a recessionary gap. The LRPC itself only shifts if the natural rate of unemployment changes, such as through structural changes in the labor market (EK MOD-3.B.3).
The LRPC lives in Topic 5.2 (The Phillips Curve) inside Unit 5, Long-Run Consequences of Stabilization Policies. It directly supports learning objectives 5.2.A (define the SRPC and LRPC using graphs), 5.2.B (explain short-run and long-run equilibrium in the Phillips curve model), and 5.2.C (explain how unemployment and inflation respond in the short run versus the long run). The LRPC is the punchline of Unit 5. It tells you that demand-side stabilization policy can move inflation and unemployment in the short run but cannot permanently lower unemployment below the natural rate. That single idea ties together the AD-AS model, the self-correcting economy, and the limits of fiscal and monetary policy. If you can draw a correctly labeled Phillips curve graph with a vertical LRPC at the natural rate, you have one of the most reliably tested graphs in AP Macro in your pocket.
Keep studying AP Macroeconomics Unit 5
Short-run Phillips curve (Unit 5)
The SRPC and LRPC are two halves of the same model. The economy always operates somewhere along the downward-sloping SRPC, and demand shocks move it along that curve, but the LRPC marks where the economy ends up once expectations adjust. Long-run equilibrium is literally the intersection of the two.
Natural rate of unemployment (Units 2 & 5)
The LRPC is anchored at the natural rate, which is frictional plus structural unemployment from Unit 2. Anything that changes the natural rate (job-search technology, labor market regulations, structural shifts) shifts the LRPC itself. This is exactly what EK MOD-3.B.3 and exam questions about LRPC shifts are testing.
Long-run aggregate supply (Units 3 & 5)
The LRPC is the mirror image of LRAS. LRAS is vertical at full-employment output; the LRPC is vertical at the unemployment rate consistent with that output. If a question shifts LRAS, ask yourself whether the natural rate changed too, because that determines whether the LRPC moves.
Inflation expectations (Unit 5)
Expectations are the mechanism that makes the LRPC vertical. When actual inflation runs above expected inflation, workers eventually demand higher wages, the SRPC shifts up, and unemployment returns to the natural rate. No expectation adjustment, no vertical LRPC.
Phillips curve questions show up in both multiple choice and free response, and the LRPC is usually the anchor. MCQs ask things like where the LRPC is vertical (at the natural rate), what must be true at the SRPC-LRPC intersection (the economy is in long-run equilibrium with no output gap), and which structural changes shift the LRPC (only changes to the natural rate of unemployment). On FRQs, the classic setup gives you numbers and makes you graph. The 2017 and 2019 short answer questions both gave an actual unemployment rate above the natural rate and asked you to work with the gap, and the 2025 FRQ started an economy in long-run equilibrium. To earn points, you need to draw a correctly labeled graph with a downward-sloping SRPC, a vertical LRPC at the natural rate, and the economy's current point plotted correctly relative to the intersection. Then you trace what happens after a demand shock (movement along the SRPC) or a supply shock (shift of the SRPC), and explain the return to the LRPC in the long run.
The SRPC slopes downward and shows a temporary trade-off where lower unemployment comes with higher inflation. The LRPC is vertical and shows no trade-off at all. The difference comes down to expectations. Along the SRPC, expected inflation is fixed; the LRPC describes what happens after expectations catch up. Quick graph check: demand shocks move you along the SRPC, supply shocks shift the SRPC, and only changes in the natural rate of unemployment shift the LRPC.
The LRPC is a vertical line at the natural rate of unemployment, meaning there is no long-run trade-off between inflation and unemployment.
Long-run equilibrium occurs where the SRPC intersects the LRPC; points left of that intersection indicate an inflationary gap and points to the right indicate a recessionary gap.
Demand shocks cause movement along the SRPC, supply shocks shift the SRPC, but only changes in the natural rate of unemployment shift the LRPC.
Trying to hold unemployment below the natural rate just raises inflation expectations, shifts the SRPC up, and leaves the economy back on the LRPC at higher inflation.
The LRPC is the Phillips-curve counterpart of LRAS; both are vertical because the economy self-corrects to full employment in the long run.
It's a vertical line at the natural rate of unemployment showing that in the long run, inflation and unemployment have no trade-off. Once inflation expectations adjust, unemployment returns to its natural rate regardless of the inflation rate.
Because inflation expectations fully adjust in the long run. Any attempt to push unemployment below the natural rate raises inflation, workers build that into wage demands, the SRPC shifts up, and unemployment returns to the natural rate.
No. Demand-side fiscal and monetary policy moves the economy along the SRPC, not the LRPC. The LRPC only shifts when the natural rate of unemployment changes, for example through structural changes in the labor market like better job-matching technology.
The SRPC slopes downward and shows a temporary inflation-unemployment trade-off at a given expected inflation rate. The LRPC is vertical at the natural rate and shows that the trade-off disappears once expectations adjust. The economy is in long-run equilibrium where the two intersect.
At long-run equilibrium, where actual inflation equals expected inflation and unemployment equals the natural rate (EK MOD-3.A.4). On a graph, that intersection sits on the vertical LRPC, and FRQs like the 2025 question often start the economy at exactly that point.
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