Definition
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Answer
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An increase in production of goods and services that occurs without an economy acquiring additional factors of production. This is because the available resources within the economy are used more intesively.
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Short-run Economic Growth
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An increase in an economy's productive potential and is what is usually meant by the term 'economic growth'.
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Long-run Economic Growth
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A rate of economic growth that is sustainable over long periods of time.
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Trend Rate
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Occurs when an economy's actual level of GDP shows a regular pattern of variation compared with its long-term trend.
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Economic Cycle
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Measures the difference between an economy's actual level of real GDP and its long-term trend level of real GDP.
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Output Gaps
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Exists when the actual level of real GDP is above the long-term trend level.
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Positive Output Gaps
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Exists when the actual level of real GDP is below the long-term trend level.
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Negative Outputs Gaps
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A measure of the number of people who are in work at a particular time.
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Employment
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The percentage of the population aged 16-64 who are in work.
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Employment Rate
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Refers to a person who is either in employment or who is unemployed and therefore seeking work.
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Economically Active
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The proportion or percentage of economically active people within a country who are unemployed.
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Unemployment Rate
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Unemployment arising from a fall in aggregate demand.
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Cyclical Unemployment
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Exists when workers are in the process of moving into a new job.
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Frictional Unemployment
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Unemployment that exhibits regular and predictable fluctuations throughout the year.
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Seasonal Unemployment
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Job losses from the long-term decline of specific industries.
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Structural Unemployment
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Occurs when workers take a decision not to enter the labour market at the current wage rate.
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Voluntary Unemployment
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The trend for many markets to become worldwide in scope.
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Globalisation
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Describes the process of removing manufacturing industries from an economy and the economic and social consequences, such as unemployment, which follow.
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Deindustrialisation
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Occurs when prices are rising, but at a decreasing rate.
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Disinflation
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The rate of decrease of the general price level and the corresponding rise in the value of money. It has become more common recently as a number of countries have experienced falls in their general price levels.
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Deflation
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An action by governments or other authorities implemented with the intention of reducing aggregate demand.
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Deflationary Policies
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Arises from firms facing increased costs of production and originates in the supply side of the economy.
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Cost-push Inflation
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A rise in the general price level that results from an increase in aggregate demand.
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Demand-pull Inflation
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A fall in the value of a country's currency against other currencies.
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Depreciation
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Describes an economy that has a low income per capita but is enjoying high rates of economic growth.
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Emerging Markets
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The sale of goods and services across national frontiers.
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International Trade
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States that even relatively inefficient economies can benefit from international trade.
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Comparative Advantage
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The advantages that a firm gains due to an increase in its size or in the size of the industry in which it operates.
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Economies of Scale
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One in which international represents a high proportion of its GDP. The UK is an increasingly open economy.
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Open Economy
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Products produced in the 'home' economy and sold to customers overseas.
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Exports
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Products bought by households, firms and the government in one country that are produced in othe countries.
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Imports
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Exists when inflows of currency recorded on the current account are smaller than outflows over some period of time.
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Current Account Defecit
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Exists when inflows of currency recorded on the current account exceed outflows over some period of time.
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Current Account Surplus
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Measures the value of imports as a percentage of consumption.
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Import Penetration
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A part of the current account of the balance of payments and measures the earnings from exports minus the expenditure on imports.
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Balance of Trade
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