kt 7

Question 1

cost push inflation

Answer 1

inflation caused by rising cost pressures (Falling aggregate supply)

Question 2

Quantity theory of money

Answer 2

Classical theory explaining inflation as the result of excessive monetary growth MV=PQ

Question 3

Phillips curve (short run)

Answer 3

inverse relationship between inflation and unemployment in the macro economy, occurring in the short run following a change in aggregate demand

Question 4

Phillips curve (long run)

Answer 4

Relationship between rate of wage inflation and unemployment in the macro economy, occurring over the long run following a change in aggregate demand and consequent adjustment in the labour market

Question 5

Monetarism

Answer 5

The belief that monetary policy is the only way for government to effectively run the macro economy

Question 6

Keynesianism

Answer 6

the belief that the macro economy can reach an equilibrium with much unemployment and that then expansionary fiscal policy is a more effective solution then monetary policy