Krugman’s Economics for AP… Modules 30-33 – Flashcards
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estimate of what the budget balance would be if real GDP were exactly equal to potential output
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cyclically adjusted budget balance
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October 1 to September 30; labeled according to the calendar year in which it ends
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fiscal year
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government debt held by individuals and institutions outside the government
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public debt
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spending promises made by governments that are effectively a debt despite the fact that they are not included in the usual debt statistics
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implicit liabilities
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desired level for federal funds rate, achieved by open-market operations
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target federal funds rate
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monetary policy that increases aggregate demand
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expansionary monetary policy
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monetary policy that reduces aggregate demand
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contractionary monetary policy
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rule for setting federal funds rate that takes into account both the inflation rate and the output gap
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Taylor rule for monetary policy
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when central bank sets explicit target for the inflation rate and sets monetary policy in order to hit that target
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inflation targeting
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changes in the money supply have no real effects on the economy
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monetary neutrality
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real quantity of money is always at its long-run equilibrium level
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classical model of the price level
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reduction in value of money held by the public caused by inflation
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inflation tax
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caused by signficant increase in the price of an input with economy-wide importance
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cost-push inflation
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caused by increase in aggregate demand
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demand-pull inflation
