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Macro Chapter 18

TermDefinition
expansionary monetary policy a central bank's action to increase the money supply in an effort to stimulate the economy
Contractionary monetary policy occurs when a central bank acts to decrease the money supply
monetary neutrality the idea that the money supply does not affect real economic variables
Phillips curve curve indicating a short-run negative relationship between inflation and unemployment rates
adaptive expectations theory the theory that people's expectations of future inflation are based on their most recent experience
stagflation the combination of high unemployment rates and high inflation
rational expectations theory the theory that people form expectations on the basis of all available information
active monetary policy the strategic use of monetary policy to counteract macroeconomic expansions and contractions
passive monetary policy a central bank's use of monetary policy only to stabilize money and price levels
Created by: v.virgil
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