Chapter 14: Long-Run Consequences of Stabilization Policies

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AP Macroeconomics

Unit 5: Long-Run Consequences of Stabilization Policies

Last updated 3:00 PM on 4/8/23
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15 Terms

1
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Rational expectations
theory that people learn to anticipate government policies that influence the economy, making the policies ineffective.
2
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Phillips curve
shows inverse relationship between inflation rate and unemployment.
3
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National debt
total amount of money that the federal government owes.
4
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Deflation
sustained decrease overall price level.
5
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Budget deficit
federal government spending- tax collections.
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Monetary inflation
when prices increase due to oversupply of currency.
7
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Inflation
sustained increase to overall price level.
8
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Monetary inflation
when prices increase due to oversupply of currency
9
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Phillips curve
shows inverse relationship between inflation rate and unemployment
10
New cards
Rational expectations
theory that people learn to anticipate government policies that influence the economy, making the policies ineffective
11
New cards
Inflation
sustained increase to overall price level
12
New cards
Deflation
sustained decrease overall price level
13
New cards
National debt
total amount of money that the federal government owes
14
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Ricardian Equivalency theory
deficit financing no different from tax financing
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Crowding out
decrease in real investment due to higher interest rates from government purchases