Labor Markets
This model assumes market clearing, flexible prices and wages.
What is the Classical Labor Market?
The equilibrium schedule for the interest rate and output such that the goods market is in equilibrium.
What is the IS curve?
Jerome Powell
Who is the Federal Reserve Chairperson?
The believe that prices are sticky and that it takes a long time before they adjust to a new long-run equilibrium.
What is the Keynesian Business Cycle Theory?
A line relating the inflation rate to the unemployment rate.
What is the Philips Curve?
The wage rate that is determined through a bargaining process by labor supply and labor demand; it is fixed for some period of time.
What is the contract wage?
The equilibrium schedule for the interest rate and output such that the money and bonds markets are in equilibrium.
What is the LM curve?
The committee in charge of monetary policy.
The point where SRAS and AD curve meet, away from potential GDP.
What is a temporary equilibrium?
Someone argued that if the public uses rational expectations, any change in a policy rule will cause households and firms to reformulate their optimal decision rules.
What is the Lucas' critique?
What is the (Friedman-Phelps) Island Paradigm?
And equilibrium relationship for price and output representing equilibrium in the goods market, the money market, and the bonds market.
What is the AD curve?
Janet Yellen
Who is the Treasury Secretary?
The business cycle property that economic variables do not change drastically from one period to the next.
What is serial persistence?
If a change in the nominal money supply changes the price level proportionally but has no effect on real variables.
What is money neutrality?
This theory claims that labor markets are not "spot" markets and that the employment level is determined by labor demand.
What is the New Keynesian Labor Market?
The effect of changing nominal money supply, changing the price level, or shifting the money demand curve.
What is a shift of the LM curve?
The type of inflation that is costly to households and firms.
What is unanticipated inflation?
The relationship between the real interest rate, nominal interest rate, and the (anticipated) rate of inflation.
What is the Fisher equation?
The believe that only aggregate supply side shock have an impact on output.
What is the Real Business Cycle Theory?
What is an unanticipated price change?
The motivation of firms to change production.
What is inventory behavior?
The rule that expresses the federal funds rate as a function of the inflation and the output gaps.
What is the Taylor Rule?
The costs attached to changing the prices of goods and services.
What are menu costs?
The assumption that economic actors make intelligent forecasts of future macroeconomic policy changes.
What are rational expectations?