Economic Performance Flashcards
economic cycle
SR fluctuations of real GDP and SR actual growth around the LR trend rate of growth. 4 phases - boom, slowdown, recession and recovery
boom
phase in economic cycle when the economy is growing at a fast rate above its LR trend rate of growth
slowdown
phase in economic cycle when rate of growth of real GDP is positive but increases at a slower rate
recession
phase in economic cycle when economic growth is negative for 2 successive quarters
recovery
phase in economic cycle where economy begins to grow after a recession
SR actual growth
measured by the % change in real GDP due to a change in AD or SRAS
real GDP
monetary value of all output of finished goods and services produced in an economy within a given time period
LR/potential growth
long term potential increase in real GDP caused by a change in productive potential of an economy to produce goods and services shown by LRAS/PPC shifting
output gap
difference between the actual level of national output and the estimated productive potential of goods and services an economy can produce
PPC curve
shows the maximum output of goods and services an economy can produce with its existing resources
positive/negative output gap
when actual output is more/less than the economy’s productive potential. AD is greater/less than SRAS. economy is operating outside/inside its PPC
economic shock
a big unexpected or unpredictable event that affects an economy and the macro economic performance positively/negatively
depression
prolonged downturn in the economy where GDP falls by at least 10%
demand side shock
affects component of AD and can change multiplier effects and accelerator effects on the level of investment
