paper 2 - topic 3 economic peformance Flashcards
short run economic growth
growth based on increased utilisation of unemployed resources
long run economic growth
growth based on increasing the potential output level of an economy
economically inactive
those of working age who arnt in work and arnt looking for work
trend growth
the rate of growth in the LRAS over time, representing the maximum potential capacity of the UK economy
economic cycle
the economic cycle refuses to the repeated partern of fluctuatinions in the short run economic growth and how it differs from the trend growth of the economy
boom
period of above average short run economic growth
downturn
period here short run economic growth falls from above the average to below the average
recession
two successive quarters of a year where short run economic growth is negative
recovery
when the short run economic growth starts to increase after recession
output gap
the difference between actual growth and trend growth
economic shocks
sudden unexpected events that will effect the macroeconmey, especially the growth rate
demand side shocks -
unexpected changes and significant changes in the Level of aggregate demand
supply side shocks
unexpected and significant changes the price of factors of production or the availability
full unemployment
the level of unemployment where those who are economically inactive are not counted, the people who are able and willing to work can
cyclical employment
unemployment caused by infufficant aggregate demand within an economy
frictional unemployment
unemployment caused bu the movement between jobs
structural unemployment
mismatch between the labour supply abaaliabvle and the labour demand for differently skilled labour, the lack of transferable skills
deflation
a fall in the average price level over time
disinflation
where the rate of inflation is falling but still positive
demand pull inflation
inflation caused by excessively high levels of aggregate demand beyond that needed to generate full employment
cost push inflation
inflation that occurs due to the rising in the cost fo production incurred by firms
commodity
commodity
a homogenous product (all output of the product is identical) that is often used used as basic inputs into production. common examples are oil, copper cotton and basic food stuffs.
open economy
an economy in which foreign trade accounts for a significant proportion of GDP
