Growth of real output resulting from using idle resources thereby taking up the slack in the economy
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Long-run economic growth
This is an increase in the economy's potential level of real output and an outward shift in the production possibility frontier
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Gross domestic product (GDP)
The sum of all goods and services produced in an economy over a period of time
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Real GDP
A measure of all goods and services produced in an economy adjusted
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Nominal GDP
This is GDP measured at the current market prices, without removing the effects of inflation
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Recession
This is a fall in real GDP for 6 months or ore
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Inflation
This is a persistent or continuing rise in the average price level
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Budget deficit
When government spending is greater than government revenue
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Monetary policy
The use by the government of interest rates in order to achieve the governments policy objectives
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Fiscal policy
The use by the government of government spending and taxation in order to achieve governments policy objectives
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The Accelerator
This is a change in the level of investment in new capital goods which is induced by a change in the rate of growth of national income or aggregate demand
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The Multiplier
The relationship between a change in aggregate demand and the resulting change in national income
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Marginal Propensity to Consume
This is the fraction of an increase in disposable income that people plan to spend on domestically produced consumer goods
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Output gap
The level of actual real output in the economy that is greater or lower than the trend output level
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Frictional unemployment
This is unemployment that is caused when workers swithc between jobs and it is normally short term
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Structural unemployment
This is a long term unemployment in which workers are less go from an industry due to a decline and these workers do not possess the necessary skills for other jobs available
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Seasonal unemployment
This is unemployment that arises are different seasons of the year caused by factors such as weather
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Real-wage unemployment
This is caused by wages being high above eqilibrium real wage
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Voluntary unemployment
This is caused by workers choosing to remain unemployed as benefits are more beneficial
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Demand-pull inflation
This is a rise in price levels caused by an increase in AD
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Cost-push inflation
This is a rise in price levels caused by an increase in the costs of production of a good
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Other cards in this set
Card 2
Front
This is an increase in the economy's potential level of real output and an outward shift in the production possibility frontier
Back
Long-run economic growth
Card 3
Front
The sum of all goods and services produced in an economy over a period of time
Back
Card 4
Front
A measure of all goods and services produced in an economy adjusted
Back
Card 5
Front
This is GDP measured at the current market prices, without removing the effects of inflation
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