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8 Cards in this Set

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