If Firms and Workers Have Rational Expectations,including Knowledge of the Policy

question 123

Multiple Choice

If firms and workers have rational expectations,including knowledge of the policy being used by the Federal Reserve,the short-run Phillips curve will be

• A)negatively sloped.
• B)positively sloped.
• C)vertical.
• D)flatter in the long run than it is in the short run.

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Definitions:

Transactions

The act of buying, selling, or exchanging goods, services, or financial assets in a market.

Optimal Spread

The most favorable allocation or distribution of assets, investments, or resources to minimize risk and maximize returns.

Market Maker

A firm or individual that quotes both a buy and a sell price in a financial market or commodity, hoping to make a profit on the bid-offer spread.

Transactions

The act of conducting business or exchange between parties, often involving the transfer of goods, services, or funds.