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Economic growth
an increase in real GDP over time
Actual output
the current level of real GDP in the economy
Potential output
the level of real GDP that an economy can reach at the natural rate of unemployment
Short term growth
Long term growth
occurs when there is an improvement in the quantity and/or quality of a country’s factors of production
Employment
the use of factors of production in the production process, usually applied on labour resources
Unemployment
occurs when people who are willing and able to work and actively seeking for work are without work at the current wage rate
Frictional unemployment
occurs when people are temporarily unemployed as they move between jobs
Seasonal unemployment
caused by changes in the demand for labour during particular times of the year
Structural unemployment
caused by changes in the sector or the structure of the economy
Cyclical unemployment
occurs during the downturn of the business cycle, when the economy is in a recessionary gap
Natural rate of unemployment
the unemployment rate when the economy is producing at the full employment level of output
Labour market
interaction between people and employers who are willing and able to work and hire at various wages
Hidden unemployment
occurs when people are technically unemployed but excluded from the official measure of unemployment
Voluntary unemployment
those of working age who choose not to actively seek employment
Underemployment
when the labour resources in an economy are being underutilised