Principles of Business and Finance Chapter 2 – Flashcards
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gross domestic product
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the total dollar value of all final goods and services produced in a country during one year
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GDP per capita
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is calculated by dividing GDP by the total population
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unemployment rate
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the portion of people in the labor force who are not working
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productivity
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the production output in relation to a unit of input
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personal income
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salaries and wages as well as investment income and government payments to individuals
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retail sales
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sales of durable and non-durable goods bought by consumers
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business cycle
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movement of the economy from one condition to another and back again
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prosperity
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a period in which most people who want to work are working, businesses produce goods and services in record numbers, wages are good, and the rate of GDP increases
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recession
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a period in which demand begins to decrease, businesses lower production, unemployment begins to rise, and GDP growth slows for two or more quarters
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depression
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a phase marked by a prolonged period of high unemployment, weak consumer sales and business failures
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recovery
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a phase in which unemployment begins to decrease, demand for goods and services increases, and GDP begins to rise again
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inflation
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an increase in the general level of prices
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consumer price index
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a number that compares prices in one year with some earlier base year.
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deflation
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a decrease in the general level of prices
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prime rate
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the rate of interest banks make available to their best business customers, such as large corporations
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discount rate
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the interest rate financial institutions are charged to borrow funds from the Federal Reserve Banks.
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treasury bill rate
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the interest on short term (13 week) U.S. government debt obligations
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treasury bond rate
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the interest on ling term (20 year) U.S. government debt obligations
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mortgage rate
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the interest individuals pay to borrow for the purchase of a new home.
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corporate bond rate
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the cost of borrowing for large U.S. corporations
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certificate of deposit rate
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the interest rate for six month time deposits at savings institutions
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capital project
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spending by businesses for items such as land, buildings, equipment, and new products
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stock
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represents ownership in a corporation
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bond
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represents debt for an organization
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budget surplus
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when the government spends less than it takes in
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budget deficit
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when the government spends more then it takes in
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national debt
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the total amount owed by the federal government
