Labour Markets and Economic Growth

These flashcards encapsulate key concepts from the lecture on labour markets and economic growth, helping students prepare for their exam.

What is Gross Domestic Product (GDP)?

GDP is the market value of all the final goods and services produced within a country in a given time period.

What are the four types of unemployment?

1. Frictional unemployment, 2. Structural unemployment, 3. Cyclical unemployment, 4. Natural unemployment.

What does the Law of Demand state in relation to labour?

The quantity of labour demanded decreases if the wage rate increases and increases if the wage rate decreases.

What is the value of marginal product of labour?

The value of marginal product is equal to the price of the product produced multiplied by the marginal product of labour.

What drives labour supply?

The wage rate influences the quantity of labour that individuals are willing to supply, determined by the substitution effect and income effect.

What is potential economic growth?

Potential economic growth refers to the increase in the capacity of an economy to produce goods and services.

What is the difference between nominal GDP and real GDP?

Nominal GDP is measured using current prices, while real GDP is adjusted for inflation and reflects the true value of goods and services.

What are the main factors driving real economic growth?

Labour supply growth, productivity growth, and increases in human and physical capital.

Why is unemployment considered a problem?

Unemployment leads to loss of income, reduced economic output, and a loss of human capital.

What does the Lorenz curve illustrate?

The Lorenz curve graphically represents income distribution and shows how far the income distribution deviates from perfect equality.