Must do Flashcards
(5 cards)
1
Q
State two conditions/assumptions necessary when drawing a PPC diagram.
A
Fixed resources and technology
Efficient use of resources
2
Q
Define potential output.
A
The level of output the economy can produce when all resources are fully employed — corresponds to full employment output (Yf).
3
Q
Define economic growth.
A
4
Q
Define actual growth.
A
An increase in real GDP resulting from better use of existing resources.
5
Q
Define actual output.
A
The current level of real output (real GDP) that the economy is producing.
