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Definition
| A rise int he average level of all prices. Usually expressed as the annual percentage change in the Consumer Price Index |
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Definition
| The theory that people understand how the economy works and learn quickly from their mistakes so that even though random errors may be made, systematic and persistent errors are not |
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Definition
| Inflation arising from an inflationary output gap caused, in turn, by a positive AD shock. |
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Term
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Definition
| Inflation arising from a negative AS shock that is not the result of excess demand in the domestic markets for factors of productions |
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Definition
| The hypothesis that when real GDP is held above potential, the persisten inflationary gap will cause inflation to accelerate |
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Term
| Expectations-Augmented Phillips Curve |
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Definition
| The relationship between unemployment and the rate of increase of money wages that arises when the output-gap and expectations components of inflation are combined |
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Term
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Definition
| A reduction in the rate of inflation |
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Term
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Definition
| The simultaneous increase in inflation and reduction in output (or its growth rate) that is caused by an upward shift of the AS curve. |
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Term
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Definition
| The cumulative loss in real GDP, expressed as a percentage of potential output, divided by the percentage-point reduction in the rate of inflation |
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