| Question |
Answer |
| Coincident Economic Indicator | An economic indicator that reaches its peak or trough at the same time as business cycles. |
| Credit Crunch | An economic state resulting from the unwillingness by banks to extend credit to some potential borrowers. |
| Demand-Pull Inflation | A portion of inflation due to excessive spending that is pulling up prices. |
| Global Crowding Out | The concept that the government's budget deficit can affect interest rates of various countries. |
| Impact Lag | The lag until a policy has its full impact on the economy. |
| Implementation Lag | The lag from a time a serious time is recognized until the time the Fed implements a policy to resolve the problem. |
| Keynesian Theory | A theory suggesting how the Fed can affect the interaction between the demand for money and the supply of money to, influence interest rates, the aggregate level of spending, and therefore economic growth. |
| Lagging Economic Indicator | An economic indicator that tends to rise or fall a few months after business cycle expansions and contractions. |
| Leading Economic Indicator | An economic indicator used to predict future economic activity. |
| Modern Quantity Theory of Money | A theory according to which a given increase in money supply leads to a predictable increase in the value of goods and services produced. |
| Monetarists | Persons following the modern quantity theory of money. |
| Monetizing The Debt | A loosening of the money supply by the Fed to offset an increase in demand for loanable funds by the federal government. |
| Phillips Curve | A graph displaying the negative relationship between inflation and unemployment. |
| Recognition Lag | The lag between the time a problem arises and the time it is recognized. |
| Theory of Rational Expectations | A theory holding that the public accounts for all existing information when forming its expectations. |
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