Microeconomics Ch 35

  1. A curve that shows the short-run trade-off between inflation and unemployment
    Phillip's curve
  2. The claim that unemployment enventually returns to its normal, or natural, rate, regardless of the rate of inflation
    Natural-rate hypothesis
  3. An event that directly alters firms' costs and prices, shifting the economy's aggregate-supply curve and thus the Phillips curve
    Supply shock
  4. The number of percent age ponts of annual output lost in the process of reducing inflation by 1 percentage point
    Sacrifice ratio
  5. The thoery that people optimally use all the information they have, including information about government policies, when forecasting the future
    Rational expectations
Card Set
Microeconomics Ch 35
Microeconomics Ch 35