Key words & definitions

Question 1

AD

Answer 1

Total expenditure on a country’s goods & services at a given price level

Question 2

Macroeconomic equilibrium

Answer 2

Where AD equals AS

Question 3

Negative output gap

Answer 3

Where actual growth is less than potential growth

Question 4

Positive output gap

Answer 4

Where actual growth is greater than potential growth

Question 5

Real GDP

Answer 5

The total value of all final goods & services produced in an economy at a given price level in a yr adjusted for inflation

Question 6

Economic growth

Answer 6

An increase in real GDP or an increase in the productive capacity of the economy

Question 10

Occupational immobility

Answer 10

When workers can’t move between different jobs because they lack the skills needed
- STRUCTURAL UNEMPLOYMENT

Question 11

Geographical immobility

Answer 11

When workers struggle to move between different jobs because the can’t move
- govt can intervene by relocation subsidies & better transport (HS2)
- STRUCTURAL UNEMPLOYMENT

Question 12

Hysteresis

Answer 12

When a recession causes long lasting effects, which persist after the economy comes out of recession
- the long term impact of a recession on unemployment