Term
| Types of firms in sticky price AS model |
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Definition
- Price Flexible
- Sticky priced |
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Term
| Stick price firms in stick price model set price based on |
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Definition
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Term
| Imperfect information model SRAS is based on |
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Definition
| Relative Price of good i.e. nominal price / price level |
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Term
| If EP Increases: The SRAS will shift |
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Definition
| Upward to the left because higher future prices will lead to firms wanting to sell less now (in order to take advantage of higher prices in future). ALso because of equation Y = Yn + a(P-EP) |
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Term
| Phillips curve shows a negative relationship between |
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Definition
| Unemployment and Inflation |
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Term
| Phillips curve says inflation depends on these 3 factors |
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Definition
- Expected inflation
- Deviation of unemployment from its natural rate or cyclical unemployment
- Supply Shocks |
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Term
| Increase in expected inflation will shift the Phillips curve up or move along the standard Phillips curve |
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Definition
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Term
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Definition
| Lost GDP / Reduction in inflation rate |
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Term
| Okuns laws states that 1% of unemployment = X% lost GDP. X = |
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Definition
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