The Phillips Curve and Economic Trade-offs

These flashcards are designed to help review the key vocabulary terms and concepts regarding the Phillips Curve and its implications on inflation and unemployment as discussed in the lecture.

Phillips Curve

A curve that represents the inverse relationship between inflation and unemployment.

Aggregate Demand (AD)

The total demand for goods and services within a particular market.

Fiscal Policy

Government policy regarding taxation and spending to influence the economy.

Monetary Policy

Central bank actions that manage the money supply and interest rates to influence the economy.

Tradeoff

The balance between two conflicting factors, such as inflation and unemployment.

Short-Run Phillips Curve (SRPC)

The Phillips Curve that reflects short-term tradeoffs between inflation and unemployment.

Long-Run Phillips Curve (LRPC)

The Phillips Curve that shows no tradeoff between inflation and unemployment in the long run.

Natural Rate of Unemployment

The level of unemployment that exists when the economy is at full employment.

Expansionary Policy

Fiscal or monetary policy intended to stimulate economic growth.

Contractionary Policy

Fiscal or monetary policy intended to reduce inflation or slow down the economy.