Flashcards in Analysis of macro-economic performance Deck (10):
How is economic growth expressed as an AS curve?
A shift to the right
Determinants of economic growth?
Explanation of resource availability changing economic growth?
-Changes in the quantity of labour resources available. The size of the workforce and its inventory to accept employment.
-Changes in the quantity of capital resources. Requiring investment in machinery and plant, and physical infrastructure
Explanation of resource quality changing economic growth?
-Increased quality of resources leads to increased factor productivity .
-Sources of increased factor productivity includes:
-education and training
What does economic stability refer to?
Economic stability refers to minimising the fluctuations associated with the trade or business cycle.
How does cyclical unemployment occur?
-When there is a negative output gap.
-Aggregate demand is insufficient to permit full employment.
-It will arise when real GDP falls
How is structural unemployment affected by AD and AS?
-It's not really affected by aggregate demand
-The causes of structural unemployment reflect restrictions on long run aggregate supply
When does Demand pull inflation occur?
-When an expansion of aggregate demand exceeds the full employment capacity of the economy to supply output. The supply is inelastic
When does cost-push inflation occur?
-When unit costs of production rise due to wage or material costs increasing in excess of productivity, shifting AS to the left.