Macroeconomics

Natural rate of unemployment:

The steady-state

rate of unemployment; the rate of unemployment to-

ward which the economy gravitates in the long run.

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G L O S S A R Y

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Natural-rate hypothesis:

The premise that fluctu-

ations in aggregate demand influence output, em-

ployment, and unemployment only in the short run,

and that in the long run these variables return to the

levels implied by the classical model.

Near money:

Assets that are almost as useful as

money for engaging in transactions and, therefore,

are close substitutes for money.

Neoclassical model of investment:

The theory

according to which investment depends on the devi-

ation of the marginal product of capital from the cost

of capital.