Unemployment & Inflation
This type of unemployment occurs when a recent graduate is looking for their very first job and is a sign of a healthy economy.
What is Frictional Unemployment?
On the foundational macroeconomic graph, the X-Axis represents this, which directly reflects the nation's employment levels.
What is Real GDP?
Fiscal Policy is controlled by two entities: the U.S. Congress and this elected official.
Who is the President?
Monetary policy is managed by this independent central bank, which was established by Congress in 1913.
What is the Federal Reserve (or "The Fed")?
This measurement is the cumulative total of all past unpaid bills added together over time, currently forming a $35 Trillion mountain.
What is the National Debt?
Demand-Pull Inflation is famously described by this six-word phrase.
What is "Too much money chasing too few goods"?
This line on the macro graph slopes downward because lower prices increase consumer purchasing power.
What is Aggregate Demand (AD)?
The two primary tools of Fiscal Policy are Government Spending and this.
What is Taxation (or Taxes)?
The main tool of Monetary Policy is setting these, which act like the "price of money."
What are Interest Rates?
This school of economic thought believes the economy naturally heals itself and requires government non-interference.
What is the Classical School?
A DVD factory worker losing their job because everyone streams movies is a prime example of this type of unemployment.
What is Structural Unemployment?
On the foundational macroeconomic graph, the Y-Axis represents this.
To hit the "gas pedal" and fix a recession, Expansionary Fiscal Policy requires the government to increase spending and do this to taxes.
What is lower taxes?
To encourage borrowing and spending during an economic slowdown, the central bank will do this to interest rates.
What is lower them?
This term describes a single 12-month budget cycle where the government spends more than it takes in from taxes.
What is the Annual Deficit?
A spike in oil and gas prices that directly inflates shipping and manufacturing costs leads to this specific type of inflation.
What is Cost-Push Inflation?
Aggregate Demand is made up of the formula C + I + G + Xn. The "I" stands for this specific type of spending.
What is Business Investment (or Factory Machinery)?
The primary policy goal of Contractionary Fiscal Policy is to cool down an overheating economy and stop this from rising too fast.
What is inflation (or prices)?
The Fed has a "Dual Mandate" to keep prices stable and to promote maximum this.
What is employment?
What is the Keynesian School of thought?
Cyclical Unemployment is known as the "bad" type of unemployment because it occurs specifically during this phase of the Business Cycle.
What is a recession (or contraction)?
This dangerous condition occurs when SRAS shifts left, simultaneously triggering a rising Price Level and a falling Real GDP.
What is Stagflation?
When inflation is really high, what will Congress do: raise taxes or cut government spending?
What is Neither? If they do either one, they probably won't be reelected
Why does the Board of Governors of the Federal Reserve serve a 14-year term?
What is- so that they do the right thing and not do what will get them reelected.
This measurement of economic output does not adjust for inflation. So it is inaccurate.
What is Nominal GDP?