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8 Cards in this Set
- Front
- Back
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misery index
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the sum of inflation and unemployment
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phillips curve
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the short-run trade off between inflation and unemployment
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natural rate of unemployment
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the normal rate of unemployment toward which the economy gravitates
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natural-rate hypothesis
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the theory that unemployment returns to its natural rate, regardless of inflation
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disinflation
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a reduction in the rate of inflation
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supply shock
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an event that directly alters firms costs and prices, shifting the economy's aggregate-supply curve and thus the Phillips curve
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sacrifice ratio
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the number of percentage points of annual output that is llost in order to reduce inflation
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rational expectations
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the theory that suggests that people optimally use all available information, including about government policies, when forecasting the future.
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