________ disrupts a country's financial markets and erodes public trust in both the government and the economy.
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multiplier effect
Through the ________, a lower interest rate will lead to greater investment spending, which will lead to higher real GDP, which will lead to more consumer spending, and so on.
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Federal Reserve
When actual real GDP falls short of potential output, the ________ and other central banks prefer to engage in expansionary monetary policy.
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Stanford economist John Taylor
________ proposed in 1993 that monetary policy should be guided by a simple formula that takes into consideration both business cycle and inflation concerns.
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tax income
When the economy falls, the propensity for ________ to decline and transfers to rise serves to limit the size of recessions.
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Taylor
The ________ rule for monetary policy is a formula for determining the federal funds rate that takes both inflation and the output gap into account.
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Inflationary measures
________ typically provide short- term political advantages, while efforts to bring inflation down have short- term political costs.
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budget balance
The ________ and business cycle have a constant relationship as it incorporates a recession that moves the total balance towards a deficit.
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