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 Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period, used in capital budgeting to assess the profitability of an investment.

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A Master of Business Administration program that is delivered fully or partially through internet-based learning platforms.

Net Present Value

A financial metric used to evaluate the profitability of an investment or project, calculated by summing all expected future cash flows, discounted back to their present value.

Discount Rate

The discount rate that is employed to ascertain the present worth of future cash streams in a discounted cash flow assessment.