Phillips Curve and Supply-Side Economics

These flashcards cover key concepts related to the Phillips Curve and Supply-Side Economics from the lecture notes.

Keynesian Demand-Side Policies

Economic theories associated with John Maynard Keynes suggesting that government intervention is necessary to stimulate demand during recessions.

Aggregate Demand (AD)

The total demand for goods and services within a particular market in a given time period.

Phillips Curve

A graphical representation showing the inverse relationship between the rate of inflation and the unemployment rate.

Short-Run Phillips Curve (SRPC)

The downward-sloping part of the Phillips Curve that reflects the short-term trade-off between inflation and unemployment.

Long-Run Phillips Curve (LRPC)

A vertical line on the Phillips Curve indicating that in the long run, there is no trade-off between inflation and unemployment.

Stagflation

A period characterized by high inflation and high unemployment, typically associated with economic stagnation.

Non-Accelerating Inflation Rate of Unemployment (NAIRU)

The level of unemployment below which inflation tends to rise.

Supply-Side Economics

An economic theory that emphasizes the importance of supply (production) in economic growth, advocating for tax cuts and deregulation.

Laffer Curve

A theoretical curve that illustrates the relationship between tax rates and tax revenue.

Crowding Out Effect

A situation in which increased government spending leads to a reduction in private sector spending and investment.