Macroeconomic policy activism Monetarism Discretionary monetary policy Monetary policy rule Quantity Theory of Money Velocity of money Natural rate hypothesis Political business cycle New classical macroeconomics Rational expectations New Keynesian economics Real business cycle theory Great Moderation Great Moderation consensus | a formula that determines the central bank’s actions. the use of monetary policy and fiscal policy to smooth out the business cycle. a theory of business cycles, associated primarily with Milton Friedman, that asserts that GDP will grow steadily if the money supply grows steadily. the hypothesis that the unemployment rate is stable in the long run at a particular natural rate. According to this hypothesis, attempts to lower the unemployment rate below the natural rate of unemployment will cause an ever-rising inflation rate. the ratio of nominal GDP to the money supply. 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. a business cycle that results from the use of macroeconomic policy to serve political ends. the period from 1985 to 2007 when the U.S. economy experienced small fluctuations and low inflation. a theory of expectation formation that holds that individuals and firms make decisions optimally, using all available information. a theory that emphasizes the positive relationship between the price level and the money supply. It relies on the equation (M × V = P × Y). the use of changes in the interest rate or the money supply to stabilize the economy. a theory that argues that market imperfections can lead to price stickiness for the economy as a whole. 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. |
Macroeconomic policy activism
Monetarism
Discretionary monetary policy
Monetary policy rule
Quantity Theory of Money
Velocity of money
Natural rate hypothesis
Political business cycle
New classical macroeconomics
Rational expectations
New Keynesian economics
Real business cycle theory
Great Moderation
Great Moderation consensus