Macroeconomics 1

  • Created by: tgrev
  • Created on: 06-05-17 16:08
3 signs of short run economic growth
MOvements within the PPF, Economic recovery or downturn, changes in the use of existing factors of production
1 of 24
3 signs of long run econ growth
Shift out of PPF, Econ growth, Changes in the quantity or quality of factors of production
2 of 24
What is the economic cycle
A cycle showing the typical changes in a macroecon, periods of rapid growth (boom) are balanced by slower periods of growth/contraction (recession)
3 of 24
What is a boom
A period of time where real GDP increases at a faster then the trend rate of growth
4 of 24
What is a positive output gap
Occurs when actual output is higher then potential output, can arise during boom when factors are used sustainabily
5 of 24
What is a negative output gap
Occurs when factors of production are underused, such unemployment is a key feature of recession
6 of 24
3 ways GDP an inaccurate measure of living standards
1. Takes into no account of inflation 2. Takes no account of population change 3. Takes no account of unofficial work/illegal work
7 of 24
How is unemployment a danger
The economy experiences a lower output level than possible, govt funds are diverted into wellfare
8 of 24
What is demand deficient unemployment
caused by short term fluctuations in aggregate demand and rises rapidly during the recession and slowdown stages of the economic cycle
9 of 24
What is frictional unemployment
When workers are nto able to perfectly synchronise leaving one job and gaining another
10 of 24
what is seasonal unemployment
Some industries make use of temp workers at particular times in the year e.g farming harvest
11 of 24
What is structural unemployment
Creates a long term issue for the economy, the structurally unemployed want to work yet do not have the correct skill set for the firm e.g miners
12 of 24
What is long term unemployment
May result from structural and technological unemployment, theory suggests the longer one is out of work, the less valid their skills and qualifications become
13 of 24
What is hidden unemployment
Under-utilisation of human capital
14 of 24
What is real wage unemployment
Associates with classical econ, occurs when markets do not clear effectively, so supply of labour is greater then demand
15 of 24
What are the costs of unemployment
Long run causing poverty, social issues associated with poverty, lost production
16 of 24
What are the benefits of unemployment
A large pool of available workers would be able to increase production quickly to take advantage of new opportunities in both domestic and global market. Firms may also be able to keep wage costs when unemployment is high
17 of 24
What is the demand management (fiscal) policy to unemployment
The govt intervenes to increase AD during a slowdown. By supplementing household demand the govt aims to ensure that firms do not need to cut output, and thus unemployment so quickly, so unemployment rises more slowly
18 of 24
What is a supply side policy to reduce unemployment
Aims to increase the willingness and ability of firms to produce. Structural unemployment can be tackled by through retaining opportunities and regional policy and improved rights to working mothers can help prevent unemployment
19 of 24
Why is inflation an economic problem
It causes problems and less of welfare due to increased price levels
20 of 24
What is demand pull inflation
Arises when AD rises quicker the supply
21 of 24
What is cost push inflation
as factors of production increase, firms increase price to maintain high prices
22 of 24
What are the costs of inflation
Reduce confidence in econ and reduce investment, Saving is unrewarded, redistributes from savers to borrowers, Inflation can harm trade if it outstrips those other countries
23 of 24
What are the benefits of inflation
Reduces the risk of deflation, a sign of an economy in serious difficulty, redistribution may help econs in high levels of debt
24 of 24

Other cards in this set

Card 2


3 signs of long run econ growth


Shift out of PPF, Econ growth, Changes in the quantity or quality of factors of production

Card 3


What is the economic cycle


Preview of the front of card 3

Card 4


What is a boom


Preview of the front of card 4

Card 5


What is a positive output gap


Preview of the front of card 5
View more cards


No comments have yet been made

Similar Economics resources:

See all Economics resources »See all MAC1 resources »