UNIT 3 KEY TERMS Flashcards
national income (NY)
value of output, expenditure or income of an economy in a year
gross domestic product (GDP)
market value of all goods and services produced in a country in one year
gross national income (GNI)
value of all goods and services produced in one year by its nationals, regardless of location (GDP + net income from abroad)
investment
addition to capital stock
purchasing power parity
the amount of a country’s currency that is needed to buy the same quantity of local goods and services that can be bought with US$1 in the US
output gap
difference between actual and potential output
aggregate demand
total value of aggregate output/rGDP that all buyers in an economy want to buy at different possible price levels, ceteris paribus
aggregate supply
total value of all goods and services produced in a country in 1 year, at different price levels
deflationary gap
insufficient AD available in the economy to generate a full-employment equilibrium
inflationary gap
too much AD, output cannot catch up
macroeconomic objectives
where the government aims to make the economy a better place for the citizens
economic growth
increase in rGDP, increase in quantity of goods and services produced in the economy in 1 year
unemployment
people of working age who are actively seeking a job but are not employed
underemployment
people who are working, but there are not enough working hours for them (i.e. part time), or overqualified
hidden employment
who are working but do not count on government records (i.e. tutoring)
chronic unemployment
unemployed for > 12 months
real wage unemployment
due to labour market imperfections, the current wage rate > the equilibrium wage rate
cyclical/demand deficient unemployment
caused by a fall in AD
seasonal unemployment
occurs when the demand for labour in certain industries varies due to seasonal patterns (i.e. ski instructor)
frictional unemployment
transitioning between jobs (voluntary)
structural unemployment
“mis match” between skills of the unemployed and job vacancy (they do not have the skills to do the job)
natural rate of unemployment (NRU)
amount of unemployed in an economy when the economy is at full employment
