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:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Dendrites

The branched extensions of a neuron that receive signals from other neurons.

Cell Body

The part of the neuron that keeps it alive and determines whether or not it will fire.

Neurons

Cells within the nervous system that transmit information to other nerve cells, muscle, or gland cells.