midterm 3 terms list - Seignorage revenue generated by...

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Seignorage: revenue generated by government’s right to print money Inflation tax: loss in real purchasing powe due to inflation (monetary policy/seignorage) Purchasing power: quantity of real goods that can be bought given price level Bubble: overvaluation of asset prices Quantitative easing: OMO but buying real assets instead of T-bills Okun’s law: negative relationship btwn. output gap and cyclical unemployment Nonaccerelating inflation rate of unemployment(NAIRU): unemployment rt at which inflation doesn’t change over time LRPC: relationship btwn unemp/inf after expectations have had time to adjust Disinflation: process of bringing down inflation that is embedded in expectations Deflation: falling agg price level Debt deflation: decrease in AD from increase in real burden of debt (caused by infl) Monetarism: money should grow at the natural rate of productivity (rGDP), and should NOT be used for stabilization Laffer curve: certain tax rate exists where increase in t will decrease govt revenue via disincentives Factor mobility: labor is perfectly mobile across industries (not so in reality) Pauper labor fallacy : since we import from low-wage countries, we shouldn’t trade in those good bc it lowers our workers wages Terms of trade: ability to buy foreign goods Depreciated: same # of currency buys LESS, weakens vs. other currency greater D
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