Aggregate Supply and the Phillips Curve

Vocabulary flashcards related to Aggregate Supply and the Phillips Curve.

Phillips Curve

Shows the negative relationship between unemployment and inflation.

Natural Rate of Unemployment

The full-employment level of unemployment where the economy adjusts in the long run.

Friedman-Phelps Analysis

An analysis highlighting the absence of a long-run tradeoff between unemployment and inflation.

Short-Run Phillips Curve

A curve that reflects the temporary trade-off between inflation and unemployment.

Long-Run Phillips Curve (LRPC)

A vertical line representing the natural rate of unemployment, indicating no trade-off with inflation.

Okun's Law

Relationship indicating the inverse connection between unemployment gaps and output gaps.

Expected Inflation

The inflation rate that economic agents anticipate in the future.

NAIRU

Non-Accelerating Inflation Rate of Unemployment; the unemployment rate at which inflation stops accelerating.

Price Shock

A sudden increase in the prices of goods and services that is not directly related to labor market conditions.

Adaptive Expectations

Inflation expectations formed based on past inflation rates.