A2 MACRO Flashcards
Long run economic growth
an increase in the potential output of an economy, shown by an output movement in country’s PPF
Short Run economic growth
Actual growth, an increase in output from making use of spare capacity and unemployed labour, known as an economic recovery.
Productivity
Output per unit of input.
Economic Cycle
a period between 4 and 10 years in which actual output fluctuates above and below the trend line.
Aggregate Demand
the total planned spending on goods and services in an economy within a particular time period.
Short-Run aggregate supply
the quantities of real output businesses plan to produce and sell at real prices levels.
Macroeconomic equilibrium
When AD=AS and when injections into the circular flow of income equal the leakages.
Long-Run aggregate supply
the real output that can be supplied when an economy is on its PPF.
Natural level of output
the long-run equilibrium level of potential output
Output gap
the difference between actual output and the trend level of output.
Negative output gap
when actual output is less than the trend growth level of output.
Positive output gap
when actual output is more than the trend growth level of output.
The national income multiplier
measures the relationship between a change in one of the components of AD and the resultant change in national income.
Government spending multiplier
measures the relationship between and change in government spending and the resulting change in the equilibrium level of national income.
Full employment
according to the Beveridge definition, occurs when only 3% of the labour force are unemployed.
Equilibrium unemployment
when the labour market is in equilibrium the level of people unemployed.
The natural rate of unemployment
the rate of unemployment when the labour market is in equilibrium.
The claimant count
measure of the number of people unemployed by counting the number of people on unemployment related benefits.
The labour force survey
a survey which estimates the level of unemployment by surveying 60,000 households to see if they are looking for work.
Frictional unemployment
The unemployment that occurs while people are between jobs.
Seasonal unemployment
unemployment resulting from seasonal demand for labour.
Structural unemployment
unemployment resulting from the decline of an industry and unemployment as a result of nontransferable skills.
Classical or real wage unemployment
a form of disequilibrium unemployment that occurs when the labour market fails to clear. Caused by real wage rates being too high.
Cyclical unemployment
Involuntary unemployment. Caused by a lack of demand in the economy causing a lack of derived demand for labour.