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) Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation.
B) Empirical evidence shows workers and firms have rational expectations.
C) Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes.
D) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.
Question 2
A period of economic expansion ends with a business cycle trough.
Indicate whether the statement is true or false
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