Principles of Business and Finance Chapter 2

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

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