(1) Chapter 8 - Economic Performance Flashcards
Define ECONOMIC PERFORMANCE
Success/failure in achieving economic policy objectives
What is ECONOMIC RECOVERY
When short-run economic growth takes place after a recession
Define DEMAND-SIDE
Impact of changes in AD on the economy
Define SUPPLY-SIDE
The changes in the potential output of the economy which is affected by the available factors of production
What is the formula for AGGREGATE DEMAND
AD = C + G + I + (X-M)
Define TREND GROWTH RATE
The rate at which output can grow, without putting pressure on inflation
What is SEASONAL FLUCTATION
Variation in economic activity from seasonal changes
What is ACTUAL OUTPUT + what is different between this and TREND GROWTH RATE
The level of output produced within a particular year. Trend level is the potential an economy is capable of producing
What is the OUTPUT GAP
The level of actual output in the economy which is greater or lower the trend output level
What is FRICTIONAL UNEMPLOYMENT
Short term unemployment due to the transition of jobs
Define GEOGRAPHICAL IMMOBILITY OF LABOUR
When workers are unwilling or unable to move area for another job
Define OCCUPATIONAL IMMOBILITY OF LABOUR
When workers are unwilling or unable to change to a different job because they lack skills
What is STRUCTURAL UNEMPLOYMENT
Long- term unemployment due to GEOGRAPHICAL and OCCUPATIONAL. When some industries are declining so workers are needed less in those areas
What is CYCLICAL UNEMPLOYMENT
When there is a lack of AD and occurs when the economy goes into a recession or depression
What is SEASONAL UNEMPLOYMENT
Unemployment cause by changes in seasons from factors such as weather
What is REAL WAGE
The purchasing power of the nominal wage
What is VOLUNTARY UNEMPLOYMENT
When workers choose to remain unemployed and refuse jobs at current market wage rates
Define NATURAL RATE OF UNEMPLOYMENT (NRU)
The rate of unemployment when the aggregate labour market is in equilibrium
What is DEMAND-PULL INFLATION
A rising price level caused by a shift in AD
What is COST-PUSH INFLATION
A rising price level caused by a shift in SRAS
What is WAGE-COST INFLATION
A rising price level caused by an increase in wage prices so SRAS shifts
Define DISINFLATION
When the rate of inflation is falling and the price level is rising more slowly
What is a MONETARIST
Economists that believe the cause of inflation is because of an increase in money supply
Define TRANSFERS
Payments flowing between countries in forms such as foreign aid, grants, private transfers and gifts
What is meant by REINDUSTRIALISE
Growth of manufacturing industries to replace industries which have disappeared
