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11 Cards in this Set
- Front
- Back
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Seignorage |
the revenue generated by a government’sright to print money (less than 1% of U.S. government’s budget…although |
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Theinflation tax |
thereductionin the real value of money held by the public caused by inflation. |
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Okun’s law |
there is a predictable negativerelationship between the output gap and the unemployment rate. Modern estimates findthat a rise in the output gap of 1% reducesthe unemployment rate by about 0.5%. |
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short-runPhillips curve |
the negative short-run relationshipbetween the unemployment rate and the inflation rate. |
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Thelong-run Phillips curve |
therelationship between unemployment and inflationafterexpectations of inflation have had time to adjust to experience. |
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naturalrate of unemployment |
is the partofthe unemployment rate unaffected by the swings of thebusiness cycle. |
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why canDisinflation require a recession? |
Onceinflation has become embedded in peoples’expectations, gettingit backdown can be difficult. |
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Debtdeflation |
the reduction in aggregate demand arisingfrom the increase in the real burden ofoutstanding debt caused by deflation |
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zerobound |
on the nominal interest rate: itcannot go below zero. |
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Liquiditytrap |
inability to use monetarypolicy because nominalinterest rates are too low and cannotfall below the zero bound. |
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Stagflation
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combinationof inflation and falling aggregate output 1. Leads to unemployment, and people feel thattheir purchasing power is squeezed by rising prices 2. Can led to feelings of pessimism |
