Recession and Stabilization Policies

Flashcards covering key concepts about recessions, depressions, fiscal and monetary policies, economic efficiency, and related theories.

Recession

A significant decline in economic activity across the economy, lasting longer than a few months.

Depression

A prolonged period of economic downturn characterized by high unemployment and low consumer demand.

Fiscal Policy

Government policies aimed at influencing economic conditions through adjustments in spending and taxes.

Monetary Policy

The process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate.

Stabilization Policy

Economic policies designed to attenuate or stabilize business cycle fluctuations and dampen macroeconomic volatility.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Economic Efficiency

A situation in which all resources are allocated optimally, resulting in maximum production and satisfaction of consumer preferences.

Business Cycle

The cycle of expansion and contraction in economic activity.

Alan Blinder's Perspective

High unemployment is seen as a colossal waste of resources, indicating inefficiency in the economy.

Samuelson's View

The political health of democracy is closely tied to the maintenance of stable high employment and living opportunities.