Chapter 22 - The Short-Run Trade-Off Between Inflation and Unemployment

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Macroeconomics

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4 Terms

1
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Rational expectations
________- the theory that people optimally use all the information they have, including information about government policies, when forecasting the future.
2
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Phillips curve
________- a curve that shows the short- run trade- off between inflation and unemployment.
3
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aggregate demand
Decreases in the money supply, cuts in government spending, or increases in taxes contract ________ and move the economy to a point on the Phillips curve with lower inflation and higher unemployment.
4
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Phillips Curve
Shifts in the ________: The Role of Expectations.