Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
New classical macroeconomics Monetary policy rule Keynesian economics Great Moderation Great Moderation consensus Velocity of money Discretionary monetary policy Political business cycle Monetarism Rational expectations Real business cycle theory Natural rate hypothesis Rational expectations model Macroeconomic policy activism New Keynesian economics | a theory of expectation formation that holds that individuals and firms make decisions optimally, using all available information. a belief in monetary policy as the main tool of stabilization combined with skepticism toward the use of fiscal policy and an acknowledgment of the policy constraints imposed by the natural rate of unemployment and the political business cycle. the hypothesis that because inflation is eventually embedded into expectations, to avoid accelerating inflation over time the unemployment rate must be high enough that the actual inflation rate equals the expected inflation rate. a formula that determines the central bank’s actions. a business cycle that results from the use of macroeconomic policy to serve political ends. an approach to the business cycle that returns to the classical view that shifts in the aggregate demand curve affect only the aggregate price level, not aggregate output. a theory of business cycles that asserts that fluctuations in the growth rate of total factor productivity cause the business cycle. the use of monetary policy and fiscal policy to smooth out the business cycle. a model of the economy in which expected changes in monetary policy have no effect on unemployment and output and only affect the price level. a theory of business cycles, associated primarily with Milton Friedman, that asserts that GDP will grow steadily if the money supply grows steadily. the ratio of nominal GDP to the money supply. a school of thought emerging out of the works of John Maynard Keynes; according to Keynesian economics, a depressed economy is the result of inadequate spending and government intervention can help a depressed economy through monetary policy and fiscal policy. Changes in aggregate demand affect aggregate output, employment, and prices. Changes in business confidence cause the business cycle. the period from 1985 to 2007 when the Canadian economy experienced small fluctuations and low inflation. policy actions, either changes in interest rates or changes in the money supply, undertaken by the central bank based on its assessment of the state of the economy. theory that argues that market imperfections can lead to price stickiness for the economy as a whole. |