Macroeconomics Definitions - Causes of Economic Growth and The Trade Cycle (Capter 32)

Actual Growth
Economic growth as measured by recorded changes in real GDP over time.
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Boom or Oeak
Period of time when the economy is growing strongly and is operating above its productive potential.
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Demand-Side Shock
A sudden and large impact on aggregate demand.
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Depression or Slump
A period of the trade cycle when there is a particularly deep and long fall in output.
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Downturn
A period of the trade cycle when either economic growth or GDP itself is falling.
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Economic Growth
A rise in output in an economy which can be either actual growth or potential growth.
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Economic Recovery
The movement back from where the economy is operating below its productive potential to a point where it is at its productive potential.
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Export-Led Growth
A rise in aggregate demand caused by a rise in exports.
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Hysteresis
The process whereby a variable does no return to its former value when charged. In terms of the trade cycle, it is used to describe the phenomenon of an economy failing to return to its from er long term trend rate of growth after a servere recession
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Output Gap
The difference between the actual level of GDP and the productive potential of the economy. There is a positive output gap when actual GDP is above the productive potential of the economy and it is in boom.
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Negative Output Gap
There is a negative output gap when actual GDP is below the productive potential of the economy.
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Positive Output Gap
There is a positive output gap when actual GDP is above the productive potential of the economy and it is in boom
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Potential Growth
Economic growth as measured by the changes in the productive potential of the economy over time.
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Recession
A period of the trade cycle when output or growth in output falls. The technical definition now used bu the UK government is that a recession occurs when growth in output in negative for two successive quarters (i.e. two periods of three months).
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Spare Capacity
For a whole economy, this exists when long run aggregate supply is greater than argreagate demand and there is a negaive output gap.
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Supply-Side Shock
A sudden and large impact on aggregate supply.
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Trade or Buisness or Economic Cycle
Regular fluctuation in the level of economic activity arount the productive potential of the economy. In buisness cycles, the economy veers from recession, when its below its productive potential, to booms when it above potential.
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Other cards in this set

Card 2

Front

Period of time when the economy is growing strongly and is operating above its productive potential.

Back

Boom or Oeak

Card 3

Front

A sudden and large impact on aggregate demand.

Back

Preview of the back of card 3

Card 4

Front

A period of the trade cycle when there is a particularly deep and long fall in output.

Back

Preview of the back of card 4

Card 5

Front

A period of the trade cycle when either economic growth or GDP itself is falling.

Back

Preview of the back of card 5
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