2.3 Economic performance

Question 1

short run economic growth

Answer 1

growth caused by utilisation of unemployed resources

Question 2

long-run economic growth

Answer 2

growth caused by expansion of economies productive capacity

Question 3

economically inactive

Answer 3

those of working age not in employment and looking for work

Question 4

economic cycle

Answer 4

repeated fluctuations in short run growth over time

Question 5

trend growth

Answer 5

expansion of productive capacity over time

Question 6

output gap

Answer 6

difference between actual growth and trend growth

Question 7

cyclical unemployment

Answer 7

unemployment caused by insufficient AD

Question 8

frictional unemployment

Answer 8

unemployment caused by in-between jobs

Question 9

structural unemployment

Answer 9

unemployment caused by mismatch in labour supply and demand

Question 10

voluntary unemployment

Answer 10

unemployment caused by people choose to remain unemployed at given wage rate

Question 11

involuntary unemployment

Answer 11

unemployment caused by people being unable to find work at given wage rate

Question 12

real wage unemployment

Answer 12

unemployment caused by real wages remaining above equilibrium wage rate

Question 13

natural rate of unemployed

Answer 13

unemployment that remains when cyclical unemployment is zero

Question 14

inflation

Answer 14

%change in price level in a year

Question 15

demand pull inflation

Answer 15

caused by excessive increases in AD

Question 16

cost push inflation

Answer 16

caused by increases in costs of production

Question 17

deflation

Answer 17

fall in price levels in time

Question 18

disinflation

Answer 18

fall in the rate of inflation

Question 19

NAIRU

Answer 19

non accelerating inflation rate of unemployment (unemployment when inflation is constant)