4.2.3 Flashcards
Economic Performance (30 cards)
What is the difference between short-run and long-run economic growth?
Short-run growth is an increase in the utilisation of existing capacity; long-run growth is an increase in the productive capacity of the economy.
Name a demand-side determinant of short-run growth.
Factors that increase Aggregate Demand (e.g., increased consumption, investment).
Name a supply-side determinant of long-run trend growth.
Factors that increase the productive capacity (e.g., technology, productivity).
What are some potential costs of economic growth?
Environmental damage, increased inequality, depletion of resources.
What are some potential benefits of economic growth?
Higher incomes, reduced poverty, increased availability of goods/services.
How can economic growth impact individuals?
Effects on living standards, employment opportunities, income.
How can economic growth impact the economy?
Effects on aggregate demand, investment, government finances.
How can economic growth impact the environment?
Potential for increased pollution, resource depletion, climate change.
What is the concept of the economic cycle?
The tendency for economic activity to fluctuate around the long-run trend growth rate.
Name an economic indicator used to identify phases of the economic cycle.
Real GDP, rate of inflation, unemployment, or investment.
What is the difference between positive and negative output gaps?
A positive output gap is when actual output is above potential; a negative output gap is when actual output is below potential.
How do demand-side shocks affect domestic economic activity?
They cause fluctuations in output, prices, and employment.
How do supply-side shocks affect domestic economic activity?
They cause fluctuations in output, prices, and employment.
How can global economic shocks affect domestic economic activity?
They can impact aggregate demand (e.g., through exports) or supply (e.g., through import prices).
Name a main UK measure of unemployment.
The claimant count.
Name another main UK measure of unemployment.
The Labour Force Survey (LFS) measure.
What is voluntary unemployment?
When individuals choose not to accept a job at the going wage rate.
What is involuntary unemployment?
When individuals are willing and able to work at the going wage rate but cannot find a job.
Name a type of unemployment.
Seasonal, frictional, structural, or cyclical unemployment.
What factors can determine employment and unemployment?
Both demand-side and supply-side factors.
What is real wage unemployment?
Unemployment caused by real wages being held above the market-clearing level.
What is the natural rate of unemployment?
The rate of unemployment that exists when the labour market is in equilibrium, consisting of frictional and structural unemployment.
What are the consequences of unemployment for individuals?
Loss of income, deskilling, social exclusion, health problems.
What are the consequences of unemployment for the performance of the economy?
Lost output, lower tax revenue, higher welfare spending, potential social unrest.
