Economics, 3rd Edition

adaptive expectations 

a model which states that individuals 

and organizations base their expectations of inflation in the 

future on past actual inflation rates

adverse selection 

where a principal knows more about their 

situation than the agent, leading to the agent preferring not to 

do business with the principal

agent 

a person who is performing an act for another person, 

called the principal

aggregate demand curve 

a curve that shows the quantity of 

goods and services that households, firms and the government 

want to buy at each price level

aggregate risk 

risk that affects all economic actors at once

aggregate supply curve 

a curve that shows the quantity of 

goods and services that firms choose to produce and sell at 

each price level