Business Quiz Chapter 2

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Harmful to people on fixed incomes

Inflation

GDP

the total market value of all final goods and services produced annually in an economy

What is not included in GDP?

things you do for yourself, ex: mowing your lawn, building a swing set.

recovery

unemployment decreases, demand increases, GDP rises

When did the last depression in the US occur?

1930s-40s

2 ways to increase productivity

Better equipment and technology and employee training

prosperity

the peak in the business cycle, GDP increases, wages are good and demand is high

business cycle

The movement of an economy from one condition to another and back again

labor force

The total number of people who are actively working, above age 16

2 causes of inflation

rising material cost, rapid wage increase

capital projects

spending by businesses for items such as land, buildings, equipment, and new products.

bond

a certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified due date.

deflation

a decrease in the general level of prices

Deflation

a decrease in the general level of prices, people have less money to buy products

GDP per capita

the output per person, calculated by dividing gross domestic product (GDP) by the total production.

4 components of GDP

consumer spending, business spending, government spending, exports minus imports

Inflation can occur when...

demand for goods is higher than the supply

recession

demand increases, unemployment rises, GDP slows for 2 or more quarters

Ripple Effect

one area of business effects another ex: less homes sold=less cars sold

When GDP is measured

only final goods are counted

stock

ownership in a corporation

People with poor credit ratings...

pay a higher interest rate

depression

prolonged period of high unemployment, GDP falls greater than 10%, 3+ years of recession.

Main cause of unemployment

reduced demand for goods and services

the sales of durable and nondurable goods bought by consumers

retail sales


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