Term
| macroeconomic policy activism |
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Definition
| the use of monetary & fiscal policy to smooth out the business cycle |
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Term
| Keynesian economics provided a rationale for _____ |
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Definition
| macroeconomic policy activism |
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Term
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Definition
| asserted that GDP will grow steadily if the money supply grows steadily |
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Term
| discretionary monetary policy |
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Definition
| the use of changed in the interest rate or the money supply to stabilize the economy |
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Term
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Definition
| a formula that determines the central bank's actions |
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Term
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Definition
| the ratio of nominal GDP to the money supply |
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Term
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Definition
| because inflation is eventually embedded into expectations, to avoid accelerating inflation over time the unemployment rate must be high enough that the actual inflation rate equals the expected inflation rate |
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Term
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Definition
| when politicians use macroeconomic policy to serve political ends |
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Term
| _____ argued that discretionary monetary policy does more harm than good & that a simple monetary policy rule is the best way to stabilize the economy |
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Definition
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Term
| monetarism believers believed that the _____ was stable & therefore steady growth of the money supply would lead to steady growth of GDP |
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Definition
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Term
| the _____, now very widely accepted, places sharp limits on what macroeconomic policy can achieve |
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Definition
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Term
| concerns about a _____ suggest that the central bank should be independent & that discretionary fiscal policy should be avoided except in dire circumstances |
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Definition
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Term
| new classical macroeconomics |
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Definition
| an approach to the business cycle that returns to the classical view that shifts in the aggregate demand curve affect only the aggregate price level, not aggregate output |
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Term
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Definition
| the view that individuals & firms make decisions optimally, using all available information |
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Term
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Definition
| market imperfections can lead to price stickiness for the economy as a whole |
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Term
| real business cycle theory |
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Definition
| claims that fluctuations in the rate of growth of total factor productivity cause the business cycle |
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Term
| _____ argues that the short-run aggregate supply curve may be vertical after all |
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Definition
| new classical macroeconomics |
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Term
| _____ claims that because workers & firms take all information into account, only unexpected changed in the money supply affect aggregate output |
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Definition
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Term
| _____ argues that market imperfections can lead to price stickiness, so that changes in aggregate demand do affect aggregate output |
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Definition
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Term
| _____ argues that fluctuations in the rate of productivity growth cause the business cycle |
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Definition
| real business cycle theory |
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