Some Economists Argue That the Short-Run Phillips Curve Is Not

question 232

Multiple Choice

Some economists argue that the short-run Phillips curve is not vertical,and that monetary policy can be effective in the short run.Which one of the following is not one of the reasons for this skepticism?

• A)Empirical evidence shows workers and firms have rational expectations.
• B)Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes.
• C)Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.
• D)Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation.

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Definitions:

Net Realizable Value

The estimated selling price in the ordinary course of business, minus any costs related to the sale or completion of goods.

Specific Write-off

The action of recognizing that a specific asset, often an account receivable, has become uncollectible and removing its value from the books.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the amount that is expected to be uncollectible.

Bad Debts Expense

An expense account reflecting amounts that are not expected to be collected due to customer defaults.