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Macroeconomics Ch.7
Definitions for "Principles of Macroeconomics 3rd Canadian Edition"
| Question | Answer |
|---|---|
| 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 |
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