Term
| Business cycles since WWII ? |
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Definition
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Term
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Definition
Avg 4-5 years
Getting longer 1980's: 8-9 years
1990's 10 years |
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Term
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Definition
12-18 months
Getting shorter |
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Term
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Definition
| Unemployment Rate + Inflation Rate |
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Term
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Definition
| Inflation caused by AD increases |
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Term
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Definition
Inflation due to increase in costs
- Increase money wage rate
- Increase money prices of raw materials |
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Term
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Definition
WWII - 1960: high inflation 6%
1960's: Low inflation 2.5%
1970's: Highest inflation (P doubled) 1980-present: low 2-3% |
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Term
| When AD is moved to SR Equilibrium, Inflation type? |
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Definition
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Term
| When AD is moved from SR Equi. back to LR Equi, Inflation type? |
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Definition
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Term
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Definition
Moves SRAS curve up and left
Oil $ ↑ |
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Term
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Definition
Moves the AD down left
Fed ↑ interest rates |
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Term
| Real Business Cycle Theorem (RBC) |
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Definition
Business cycles caused mostly by (-)Demand Shock
Recession caused by (-)Supply Shocks
Economy always on LRAS therefore no recessions when AD shifts down
Official P never falls but actual P does
Y↓ only if Yp↓ --> LRAS Shifts left
Labor Productivity ↓ causing Yp↓ |
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Term
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Definition
| Firms keep valuable workers and utilize them less intensively output↓ > labor↓ therefore Y/L↓ |
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Term
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Definition
| %ΔMo + %Δ Velocity = %Δ Inflation + %Δ Gdp |
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Term
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Definition
Recessions caused by Labor Hoarding
Y↓ > L↓
Y/L↓ |
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