In the Mundell-Fleming model for a small open economy with perfect capital mobility and flexible exchange rates, if the economy is operating at above the natural level in the short run, then in the long run the price level will rise, the exchange rate will , and net exports will to restore the economy to its natural rate

If a company’s employees are angry about their work, a visiting auditor may also become agitated, illustrating the power of

Money from an allowance or job is known as .

Crowding out is a phenomenon focused upon most by the macroeconomists of whereby a government deficit interest rates, which in turn private investment spending. this group also believed that fiscal policy is the only thing that can lower natural unemployment. is just as effective in countering recessions as monetary policy. can be used most of the time, but monetary policy becomes a better option when velocity is fluctuating. should be used only if the central bank follows a monetary policy rule. faces problematic lags in propagating changes throughout the economy.