Section 3 Economic Performance Flashcards
What is meant by the long run trend rate of growth
The avg increase in real GDP over time
What is meant by the economic cycle
Short run fluctuations in economic activity around the long -run trend rate of growth - changes in actual GDP
What demand-side factors can cause changes in the economic cycle
Mainly caused by changes in AD
Consumer + business confidence
Changes in wealth factors
Government policy
Globalisation
Exchange rate factors
The accelerator and the multiplier
What supply side factors can cause changes in the economic cycle
Changes in costs of production
Supply side shocks
What is an output gap
The different between the actual output and potential output
What is meant by shortrun economic growth
An increase in real output mainly caused by increases in AD
How can falls in costs of production cause sr economic growth
Lower costs means firms are willing to increase output shirt right of SRAS
What is meant by LR economic growth
An increase in productive capacity of an economy
Shown by an outward short of LRAS
What are capital goods
Goos used in the production process
What is an outward short of LREG in PPF caused by
Aggregate supply
What is inflation
Sustained increase in the general PL in an economy
How is inflation measured
The percentage change in the CPI
What is deflation
A sustained decrease in the general price level
What is disinflation
Where the rate of inflation is still falling but still positive , prices are rising at a slower rate
What is hyperinflation
Excessively high rates of inflation - over 50%
What is meant by price stability
When inflation remains broadly constant over time
How doo we measure the size of an economy
National income - common measure of NI is GDP
What is GDP
The total value of goods and services produces within the boundaries of an economy in a given period of time
How do we measure GDP
Output,expenditure, and income measure
What are 2 reasons why GDP can increase
More output is produced
Prices have risen
How do we measure economic growth
% change in REAL GDP - measured over a quarter of a year
What do constant prices show
Real GDP
What do current prices show
Nominal GDP
What is a recession
2 consecutive quarters of negative real GDP
What is real GDP per capita
Real GDP per person
Good indicator of living standards
What is economically active
Those aged 16+ who are either in employment of unemployed
What is economically inactive
Those people not actively seeking work
What is the difference between employment and unemployment
If you are employed you have a job
Unemployment is for those without a job , have been actively seeking work in the past 4 weeks and are available to start work in 2 weeks
how to measure unemployment
Labour force survey
How to calculate employment rate
Number employed/ working population X 100
What is unemployment rate calculation
Number unemployed/ economically active X 100
How to calculate economic inactivity
Economically inactive / working population X 100
