3.3: Macroeconomic Objectives

Question 1

Unemployment

Answer 1

People who are willing and able to work, actively searching for work, but are not employed

Question 2

Economic growth

Answer 2

The growth of the real value of output in an economy over time. Usually measured as growth in real GDP.

Question 3

Labour force

Answer 3

All people of working age who are either employed or willing and able to work

Question 4

Cyclical unemployment

Answer 4

Occurs due to insufficient AD, usually during the contraction stage of the business cycle

Question 5

Structural unemployment

Answer 5

Occurs when there is a mismatch between the skills required and the skills available in the labour market.

Question 6

Seasonal Unemployment

Answer 6

Occurs when the demand for labour in certain industries changes on a seasonal basis because of variations in needs

Question 7

Frictional Unemployment

Answer 7

Occurs when workers are between jobs. This may be because:
* They have been fired
* Their employer went out of business
* They are in search of a better job
* They may be waiting to start a new job

Question 8

Natural rate of unemployment

Answer 8

The level of employment at when the economy is operating at full employment, consisting of seasonal, frictional, and structural unemployment.

Question 9

Inflation

Answer 9

A sustained increase in the APL within an economy

Question 10

Demand-pull inflation

Answer 10

Involves the increase in APL due to increases in AD

Question 11

Cost-push inflation

Answer 11

Refers to an increase in APL due to factors negatively affecting aggregate supply such as an increase in costs of production.

Question 12

Deflation

Answer 12

A sustained decrease in the APL within an economy

Question 13

Disinflation

Answer 13

A temporary slowing of the pace of price inflation and is used to describe instances when the inflation rate has reduced marginally over the short term