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Macroeconomics Ch.7

Definitions for "Principles of Macroeconomics 3rd Canadian Edition"

Recessionary Gap a positive output gap, which occurs when potential output exceeds actual output
Expansionary Gap a negative output gap which occurs when actual output is higher than potential output
Depression a particular severe or protracted recession
Recession (contraction) a period in which the economy is growing at a rate significantly below normal
Trough the end of a recession -- the low point of economic activity prior to a recovery
Peak the beginning of a recession -- the high point of economic activity prior to a downturn
Expansion a period in which the economy is growing at a rate above normal
Boom a particularly strong and protracted phase of an expansion
Potential Output (or potential GDP or full-employment output) the amount of output (real GDP) that an economy can produce when using its resources such as capital and labour, at normal rates
Output Gap (or Y - Y*) the difference between the economy's potential output and its actual output at a point in time
Structural Unemployment unemployment that occurs when workers are unable to fill avaliable jobs because they lack the skills or do not live where the jobs are avaliable
Frictional Unemployment the short-term uneployment associated with the process of matching workers with jobs
Cyclical Unemployment the extra unemployment brought by periods of recession
Seasonal Unemployment unemployment associated with the seasons and/or weather
Natural Rate of Unemployment (or u*) the part of the total unemployment that is attributable to various kinds of unemployment
Okun's Law states that each extra % point of cyclical unemployment is associated with a 2-%-point increase in the output gap measured in relation to potential output
Created by: aliciab