Enhance Your Learning with Economics - Phillips Curve Flash Cards for quick understanding
A graphical representation of the inverse relationship between inflation and unemployment in an economy.
The rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.
The state of being without any work, yet actively seeking employment.
A curve that shows the trade-off between inflation and unemployment in the short run, suggesting an inverse relationship.
A curve that represents the natural rate of unemployment, indicating that in the long run, there is no trade-off between inflation and unemployment.
The sacrifices made in one area to achieve gains in another area, such as the trade-off between inflation and unemployment.
The consequences and effects of economic policies on inflation and unemployment, as suggested by the Phillips Curve.
The criticisms and challenges faced by the Phillips Curve theory, including its applicability in different economic conditions.
The constraints and shortcomings of the Phillips Curve model, such as its inability to explain stagflation and supply-side shocks.
An extension of the Phillips Curve theory that incorporates the role of inflation expectations in determining the trade-off between inflation and unemployment.
A theory that suggests individuals form their expectations of future events based on past experiences and observations.
A theory that assumes individuals make predictions about future events based on all available information, including economic data and policy announcements.
A situation characterized by high inflation, high unemployment, and stagnant economic growth, which challenges the traditional Phillips Curve relationship.
Sudden changes in production costs or availability of key inputs that impact the economy's aggregate supply, potentially leading to inflation and unemployment.
The actions taken by a central bank to manage the money supply and interest rates to influence economic growth, inflation, and unemployment.
The use of government spending and taxation to influence the economy, including its impact on inflation and unemployment.
A type of inflation caused by excessive aggregate demand, typically resulting from increased consumer spending or government expenditure.
A type of inflation caused by increases in production costs, such as wages or raw material prices, leading to higher prices for goods and services.
The rate of unemployment that exists when the economy is in equilibrium, with no cyclical unemployment, only frictional and structural unemployment.
Unemployment that occurs due to fluctuations in economic activity, such as recessions or booms, and is not related to individual skills or qualifications.
Unemployment that occurs when individuals are in the process of transitioning between jobs or entering the labor market for the first time.
Unemployment that arises from a mismatch between the skills and qualifications of workers and the requirements of available jobs.
An empirical relationship between the change in the unemployment rate and the change in real GDP, suggesting that for every 1% increase in unemployment, GDP will be approximately 2% lower than its potential.
The lowest level of unemployment that can be sustained without causing accelerating inflation, representing the long-run Phillips Curve.
The idea that past events or shocks can have persistent effects on the economy, including the potential impact on the Phillips Curve relationship.
A situation where interest rates are very low, and monetary policy becomes ineffective in stimulating economic growth and reducing unemployment.
A monetary policy framework where a central bank sets an explicit target for inflation and adjusts its policy instruments to achieve that target.
The difference between actual output and potential output in an economy, indicating the level of resource utilization and potential inflationary pressures.
A mechanism that automatically adjusts wages, benefits, or other payments based on changes in the cost of living, typically measured by inflation.
The anticipated rate of inflation that individuals and businesses incorporate into their decision-making processes, influencing wage negotiations and price-setting behavior.
The percentage of the labor force that is unemployed and actively seeking employment.
The percentage increase in the average level of prices for goods and services over a given period of time.
The total demand for goods and services in an economy at a given price level and in a given time period.
The total supply of goods and services in an economy at a given price level and in a given time period.
The quantity of goods and services produced in an economy, typically measured by real GDP.
An increase in the production of goods and services over time, resulting in higher standards of living and improved economic well-being.
A significant decline in economic activity, typically characterized by a contraction in GDP, increased unemployment, and reduced consumer spending.
A period of positive economic growth, typically characterized by an increase in GDP, decreased unemployment, and higher consumer spending.
The instruments and actions used by central banks to control the money supply, interest rates, and credit availability in an economy.
The measures and actions taken by governments to influence the economy through changes in government spending and taxation.
An institution responsible for managing a country's money supply, controlling interest rates, and ensuring the stability of the financial system.
The involvement of the government in the economy through policies, regulations, and actions aimed at achieving specific economic objectives.
Statistics and data that provide insights into the overall health and performance of an economy, including inflation, unemployment, and GDP.
The actions and measures taken by governments and central banks to manage and influence the economy, including monetary and fiscal policies.
A state of balance or stability in an economy, where the supply and demand for goods and services, as well as other economic variables, are in harmony.
The optimal allocation of resources in an economy to maximize the production of goods and services, resulting in the highest possible standard of living.
A situation where resources are not allocated optimally, leading to a suboptimal level of production and a lower standard of living.
A condition in which an economy experiences steady growth, low inflation, and low unemployment, without excessive fluctuations or crises.
The ups and downs in economic activity, including periods of expansion and recession, caused by various factors such as changes in aggregate demand or supply.
The process of making predictions about future economic conditions, such as GDP growth, inflation, and unemployment, based on available data and economic models.