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) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.
B) Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation.
C) Empirical evidence shows workers and firms have rational expectations.
D) Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes.
C
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Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
A) $180 B) $100 C) $80 D) $20
An aggregate supply curve that is either horizontal or upward sloping, depending on whether the absolute price level increases as firms produce more output is called:
A) short-run aggregate supply curve. B) long-run aggregate supply curve. C) potential GDP. D) NAIRU.