If Employees and Employers Always Accurately Predict Inflation, What Is

question 88

Multiple Choice

If employees and employers always accurately predict inflation, what is the shape of the Phillips curve?

• A)It is horizontal in the short and long run.
• B)It is vertical in the short and long run.
• C)It is vertical in the short run and upward sloping in the long run.
• D)It is downward sloping in the short run and vertical in the long run.

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Definitions:

Common-size Statement

A financial statement in which all line items are expressed as a percentage of a base figure within the statement, facilitating comparison across different periods or companies.

Liability Accounts

Accounts on a company's balance sheet that represent the company's obligations to others, including loans, accounts payable, mortgages, and accrued expenses.

Total Assets

The sum of all assets owned by a company, including cash, inventory, property, and equipment, reflected on the balance sheet.

Use of Cash

The ways in which a company or individual employs their available cash resources, including operating expenses, investments, and financing activities.