1cost-push inflation
inflation that is caused by a significant increase in the price of an input with economy-wide importance.
2crowding-out effect
occurs when a government deficit drives up the interest rate and leads to reduced investment spending.
3demand-pull inflation
inflation that is caused by an increase in aggregate demand.
4fiscal policy
the use of government purchases of goods and services, government transfers, or tax policy to stabilize the economy.
5full employment
state of the economy when there is no cyclical unemployment
6long run
the time period in which all inputs can be varied.
7monetarism
asserts that GDP will grow steadily if the money supply grows steadily.
8phillips curve (long run)
shows the relationship between unemployment and inflation after expectations of inflation have had time to adjust to experience.
9phillips curve (short run)
represents the negative "immediate" relationship between the unemployment rate and the inflation rate (abridged def).
10rational expectations theory
the view that individuals and firms make decisions optimally, using all available information