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11 Cards in this Set
- Front
- Back
Aggregate Demand Curve
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A relationship between overall spending in the economy and the aggregate price level. |
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Real Balance Effect
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The hypothesis that overall wealth in the economy will be inversely related to the overall price level, ad therefore the aggregate demand and the price level will be inversely related.
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Foreign Trade Effect
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The hypothesis that net exports will be inversely related to the overall price level, and therefore that aggregate demand and the price level will be inversely related.
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Short-Run Aggregate Supply (SRAS) Curve
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A relationship between real output and the overall price level in the short run; a horizontal version of the curve indicates that firms in the short run meet demand, on average, at existing prices. |
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Long-Run Aggregate Supply (LRAS) Curve
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A relationship between potential output and the inflation rate, a vertical curve indicating that potential output is independent of the inflation rate.
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Stagflation |
The combination of a recessionary gap and a rising price level. |
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Phillips Curve
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A term that typically refers to a statistical relationship between the inflation rate and the unemployment rate.
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Expectations-Augmented Phillips Curve Model
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Distinguishes between a short-run and a long-run Phillips curve and argues that short-run version shifts when expectations about the inflation rate change. |
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Long-Run Phillip's Curve
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A relationship between the inflation rate and the unemployment rate in the long run; the vertical curve is drawn at the natural rate of unemployment.
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Short-Run Phillip's Curve
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A relationship between actual unemployment and the inflation rate for given inflationary expectations.
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Adaptive Expectations of Inflation
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A method of forming expectations about the inflation rate that involves looking to past experience, especially recent past experience.
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