Chapter 2 Economic Activity

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

a phase marked by a long period of high unemployment, weak consumer sales, and business failures

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

production output in relation to a unit of input, such as a worker

the phase of the business cycle in which unemployment decreases, demand for goods and services increases, and GDP begins to rise

an increase in the general level of prices

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

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

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