Definitions

Economic growth: in the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in the maximum output that the economy can produce.


Unemployment: a situation where people are out of work but are willing and able to work.


Labour force: the people who are employed and unemployed, that is, those who are economically active.

Economically inactive: people of working age who are neither nor unempoyed.

Deflation: a sustained fall in the general price level.

Balance of payments: a record of money flows coming in and going out of a country.

Elastic: responsive to a change in market conditions.

Inflation rate: the percentage increase in the price level over a period of time.

Trend growth: the expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation.

Full employment: a situation where those wanting and able to work can find employment at the going wage rate.

Hyperinflation: an inflation rate above 50 per cent.

Nominal GDP: output measured in current prices and so not adjusted for inflation.

Informal economy: economic activity that is not rec[orded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal.