In the Rational Expectations View

question 66

Multiple Choice

In the rational expectations view,

• A)wages are flexible downward but prices are inflexible downward.
• B)prices are flexible downward but wages are inflexible downward.
• C)discretionary policy tends to be countercyclical.
• D)discretionary policy tends to be ineffective.

---

Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for the various categories is represented as a percentage of a base figure.

Sarbanes-Oxley Act

U.S. legislation enacted in 2002, aimed at protecting investors from fraudulent accounting activities by corporations.

Internal Control

The policies and procedures used to safeguard assets, ensure accurate business information, and ensure compliance with laws and regulations.

Ratios

Quantitative measures that are used to assess the financial health, performance, and condition of a business by comparing two pieces of financial data.