The Tendency to Deviate from Sound Long-Run Plans in the Short-Run

question 22

Multiple Choice

The tendency to deviate from sound long-run plans in the short-run is known as ________.

• A)the failure of adaptive expectations
• B)the failure of rational expectations
• C)the time inconsistency problem
• D)the NIMBY,or not in my backyard problem

---

Definitions:

Expenses

The outflow of money to pay for goods or services, an essential component of a company's operations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to the accrual basis.

Revenue Recognition

The accounting principle that governs the conditions under which revenue is recognized in the financial statements, ensuring it is recorded when earned.

Payment

It is the transfer of money or goods from one party to another as a settlement of an obligation.