Cengage Principles of Business, 8th edition Ch 2 Vocab.

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Bond
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A certificate representing a promise to pay a definite amount of money at a stated interest rate on a specific due date.
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Budget Deficit
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A financial situation that occurs when a government spends more than it takes in.
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Budget Surplus
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A financial situation that occurs when a government spends less than it takes in.
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Business Cycle
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The movement of the economy from one condition to another and back again. It has four phases including prosperity,recession, depression, and recovery.
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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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Certificate of Deposit Rate
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The rate in six-month time deposits at saving institutions.
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Corporate Bond Rate
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The cost of borrowing for large U.S. corporations.
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Deflation
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A decrease in the general level prices.
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Depression
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The phase of the business cycle that is marked by a prolonged period of high unemployment, weak consumer sales, and business failures.
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Discount Rate
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The rate financial institutions are charged to borrow funds from the Federal Reserve banks.
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Emerging Markets
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Places where consumer incomes and buying power are increasing because of economic expansion.
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GDP Per Capita
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The output per person, calculated by dividing gross domestic product (GDP) by the total production.
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Gross Domestic Product (GDP)
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The total value of all final goods and services produced in a country during one year.
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Inflation
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An increase in the general level of prices.
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Labor Force
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All people above age 16 who are actively working or seeking work.
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Mortgage Rate
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The amount individuals pay to borrow for the purchase of a home.
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National Debt
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The total amount of money owed by the federal government.
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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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Price Index
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A number that compares prices in one year with some earlier base year.
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Prime Rate
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The rate banks make available to their best business customers, such as large corporations.
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Productivity
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The production output in relation to a unit of input, such as a worker.
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Prosperity
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The peak of the business cycle, it is 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 gross domestic product (GDP) growth increases.
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Recession
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The phase of the business cycle in which demand begins to decrease, businesses lower production, unemployment begins to rise, and gross domestic product (GDP) growth slows for two or more quarters of the calendar year.
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Recovery
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The phase in the business cycle in which unemployment begins to decrease, demands for goods and services increases, and gross domestic product (GDP) begins to rise.
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Retail Sail
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The sales of durable and nondurable goods bought by consumers.
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Stock
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Ownership of a corporation.
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T-Bill Rate
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The yield on short-term (13 weeks) U.S. government debt obligations.
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Treasury Bond Rate
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The yield of long-term (20 years) U.S. government debt obligations.
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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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