8 economic performance Flashcards
(52 cards)
economic recovery definition
when short-run economic growth takes place after a recession
demand-side economic growth definition
the impact of changes in aggregate demand on the economy
supply-side econoic growh definition
changes in the potential output of the economy which is affected by the available factors of production
e.g changes in the size of the labour force
trend growth rate definition
the rate at which output can grow, on a sustained basis, without putting pressure on inflation
annual percentage increase in the productive capacity of the economy
seasonal fluctuation definition
variation of economy activity resulting from seasonal changes in the economy
economic cycle definition
upswing and downside in aggregate economic activity taking place over 4-12 years
in order to be an economic cycle has to be longer than seasonal fluctuation
actual output definition
level of real output produced in the economy in a particular year
trend level of output definition
what the economy is capable of producing when working at full capacity
difference between trend level and actual output
actual output differs when there is positive or negative output gap
what is a boom
A period of economic activity characterised by an increase in the rate of real output growth and increasing inflation.
what is a trough
A sustained period of low economic growth which usually follows a recession and is usually associated with:
Low growth
High unemployment
Low inflation
Low levels of confidence
what is recovery
When an economy grows after a period of contraction.
what is a recession
negative real GDP growth for 2 or more consecutive quatres
what is a depression
A sustained reduction in economic activity and GDP that lasts for a long period of time (typically 2 years or more) and leads to very high levels of unemployment
aka a prolonged trough
output gap definition
the level of actual real output in the economy is greater pr lower than the trend output level
4 benefits of economic growth
- increases standard of living
- provides new and more environmentally friendly technologies
- produces a fiscal dividend (more tax revenue from indirect tax and direct tax)
- lead to a cycle of benefits (greater confidence, increased investment, better technology and capital, greater international competitiveness, higher profits)
5 costs of economic growth
- uses up finite resources
- leads to pollution
- can widen inequalities and distribution of income and wealth
- leads to urbanisation
- growth in population, more people who are poor
frictional unemployment definition
unemployment that is usually short term and occurs when a worker switches between jobs, time lags
also known as transitional unemployment
geographical immobility of labour
when workers are unwilling or unable to move from one are to another in search of work
occupational immobility of labour
when workers are unwilling or unable to move from one type to another type of job
e.g because different skill set needed
structural unemployment definition
long-term unemployment occurring when some industries are declining, even though other industries may be growing, also occurs within a growing industries when capital increases and reduces the demand for labour and requires new skills
what 2 ways is structural unemployment caused
- unable to adapt to a change in demand, leads to more efficient competitors (geographical immobility of labour)
- change in skills needed as industries change the way they produce goods (occupational immobility of labour)
deindustrialisation definition
decline of manufacturing industries
cyclical unemployment definition
unemployment caused by a lack of aggregate demand in the economy
