Chapter 2 Economic Activity

deflation
a decrease in the general price level
business cycle
the movement of an economy from one condition to another and back again
capital project
spending by businesses for items such as land, buildings, and equipment
gross domestic product (GDP)
the total value of all final goods and services produced in a country in one year
budget surplus
government spends less than it takes in
depression
a phase marked by a long period of high unemployment, weak consumer sales, and business failures
bond
represents debt of the government or a corporation
personal income
salaries and wages as well as investment income and government payments to individuals
GDP per capita
the GDP divided by the total population of a country
productivity
production output in relation to a unit of input, such as a worker
recovery
the phase of the business cycle in which unemployment decreases, demand for goods and services increases, and GDP begins to rise
inflation
an increase in the general level of prices
stock
represents ownership in a corporation
budget deficit
government spends more than it takes in
unemployment rate
the portion of people in the labor force who are looking for work but are not working
retail sales
the sales of durable and nondurable goods bought by consumers
prosperity
a phase in the business cycle in which unemployment is low, businesses produce many goods and services and wages are good
consumer price index (CPI)
a number that compares prices in one year with some earlier base year
recession
a phase of the business cycle in which demand, production, and GDP growth decrease and unemployment begins to rise
national debt
the total amount owed by the federal government