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Related Flashcards
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Cards In This Set
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Aggregate demand
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The total demand for goods and services in the economy.
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Demand-pull inflation
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Inflation that is initiated by an increase in aggregate demand.
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Cost-push inflation
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Inflation caused by an increase in costs.
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Sticky wages
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The downward rigidity of wages and an explanation for the existence of unemployment.
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Phillips Curve
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A curve that shows the relationship between the inflation rate and unemployment rate.
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NAIRU
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Non accelerating Inflation Rate of Unemployment; a method of calculating both the unemployment and inflation rate.
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Stabilization policy
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Discusses monetary and fiscal policy and its goals which are to smooth out fluctuations in output and employment and to keep prices as stable as possible.
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Time lags
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Delays in the economy's reponse to stabilization policies.
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Recognition lags
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The time it takes for policy makers to recognize the existence of a boom or a slump.
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Implementation lag
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The time it takes to put the desired policy in effect once economists and policy makers recognized that the economy is in a boom or a slump.
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Response lag
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The time that it takes for the economy to adjust to the new conditions after a new policy is implemented.
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Absolute advantage
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The advantage in the production of a good enjoyed by one country over another when it uses fewer resources to produce that good than the other country does.
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Comparative advantage
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The advantage in the production of a good enjoyed by one country over another when that good can be produced at lower cost in terms of other goods than it could be in the other country.
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Trade Barriers
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Take many forms, but its main forms are tariffs, export subsidies and qutoas.
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Tariff
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A tax on imports.
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