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17 Cards in this Set
- Front
- Back
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Capital Account |
an account that describes the flow of capital between a country and other countries |
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Dollarization |
the adoption of a sound currency, like the US dollar, as a country's money |
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Exchange Rate Targeting |
monetary policy strategy that uses a strong nominal anchor to promote price stability |
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Seignorage |
the revenue a government receives by issuing money |
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Aggregate Demand Curve |
a relationship between the price level and the quantity of aggregate output demanded when the goods and money markets are in equilibrium |
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Monetary Policy Curve |
the relationship between the real interest rate the central bank sets and the inflation rate |
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Demand-pull Inflation |
inflation that results when policy-makers pursue policies that shift the aggregate demand curve |
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Activists |
economists who regard the self-correcting mechanism through wage and price adjustment as very slow because wages and prices are sticky and so see the need to pursue active policy to eliminate high unemployment when it develops |
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Inflation Target |
a central bank target for the inflation rate |
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Inflation Gap |
the difference between inflation and the inflation target |
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Implementation Lag |
the time it takes for a policymakers to change policy instruments once they have decided on a new policy |
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Nonactivist |
economists who believe wages and prices are very flexible, so the self-concerning mechanism is very rapid; they thus do not see the need to pursue policies to return the economy to full employment |
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Balance of Payments |
a bookkeeping system for recording all payments that have a direct bearing on the movement of funds between a country and foreign countries |
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Gold Standard |
a fixed exchange rate regime under which a currency is directly convertible into gold |
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Special Drawing Rights |
an IMF-issued paper substitute for gold that functions as international reserves |
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Currency Board |
a monetary regime in which the domestic currency is backed 100% by a foreign currency and in which the note-issuing authority, whether the central bank or the government, establishes a fixed exchange rate to this foreign currency and stands ready to exchange domestic currency at this rate whenever the public requests it |
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Taylor Principle |
the principle that the monetary authorities should raise nominal interest rates by more than the increase in the inflation rate |
