79 Key Terms
Key Terms
adaptive expectations: the theory that people look at past experience and gradually adapt their beliefs and behavior as circumstances change
expected inflation: a future rate of inflation that consumers and firms build into current decision making
neoclassical perspective: the philosophy that, in the long run, the business cycle will fluctuate around the potential, or full-employment, level of output
physical capital per person: the amount and kind of machinery and equipment available to help a person produce a good or service
rational expectations: the theory that people form the most accurate possible expectations about the future that they can, using all information available to them
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