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Rational Expectations
The economic theory suggesting individuals make decisions based on their logical expectations for the future, effectively using all available information to predict future events accurately.
Long-Run Phillips Curve
A concept suggesting that in the long term, there is no trade-off between inflation and unemployment, implying that inflation does not affect the natural rate of unemployment.
Short-Run Phillips Curve
The Short-Run Phillips Curve depicts an inverse relationship between unemployment and inflation in the short term, indicating that lower unemployment can come with higher inflation.
Monetary Policy
The process by which a government, central bank, or monetary authority manages the money supply to achieve specific goals, such as controlling inflation, maintaining employment, and stabilizing the currency.
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