Macro Vocab

Macro Vocab - Macro Vocab Chapter 13 Cost Push(Supply Side...

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Macro Vocab Chapter 13 Cost Push(Supply Side)- Inflation caused by an increase in prices Cost Shock- A change in costs that shifts the AS curve Demand Pull Inflation- Inflation that is initiated by an increase in AD Hyperinflation- A period of very rapid increases in the overall PL Inflationary Gap- Potential Output/GDP- Level of agg output that can be sustained in the long run without inflation Real Wealth- The change in consumption brought about by a change in real wealth that results from a change in the PL Stagflation- Overall PL rises rapidly during periods of recession or high and persistent unemployment Sustained Inflation- The overall PL continues to rise over some fairly long period of time Chapter 14 Cyclical Unemployment- The increase in unemployment that occurs during recessions and depressions Efficiency Wage Theory- An explanation for unemployment that holds that the productivity of workers increases with the wage rate. If this is so, firms may have an incentive to pay wages above the market-clearing rate. Explicit Contracts- Employment contracts that stipulate worker’s wages, usually for a period of 1 to 3 years Frictional Unemployment- Unemployment due to the normal working of the labor market, used to denote short-run job/skill matching problems Inflation Rate- The percentage change in the price level Labor Demand Curve- Shows the about of labor a firm will employ at each wage rate Labor Supply Curve- Shows the amount of labor that households want to supply at each wage rate
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NAIRU- The non-accelerating inflation rate of unemployment Natural Rate of Unemployment- Occurs as part of a normal functioning of the enconomy. Sometimes taken as the sum of the frictional and structural unemployment Phillips Curve- Shows the relationship between the inflation rate and the unemployment rate Relative-Wage Explanation of Unemployment- An explanation for sticky wages: If workers are concerned about their wages relative to other workers in other firms and industries, they may be unwilling to accept a wage cut unless they know that all other workers are receiving similar cuts Social, or Implicit Contracts- Unspoken agreements between workers and firms that firms will
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Macro Vocab - Macro Vocab Chapter 13 Cost Push(Supply Side...

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