How do rational expectations influence the Long Run Phillips Curve in the context of fiscal policy?

Rational expectations refer to the idea that people make decisions based on all available information and their understanding of how the economy works. In the context of the Long Run Phillips Curve, which shows the relationship between inflation and unemployment, rational expectations suggest that if the government uses fiscal policy to increase demand and lower unemployment, people will anticipate future inflation. As a result, they may adjust their behavior, such as demanding higher wages, leading to actual inflation rather than just a temporary decrease in unemployment. For example, if the government spends more money to boost the economy, workers might expect prices to rise and ask for higher pay, which can push inflation up without significantly reducing unemployment in the long run. Thus, rational expectations can limit the effectiveness of fiscal policy in achieving lasting improvements in unemployment rates.