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Flashcards in midterm - chapter 2 Deck (38):
1

What are some effects of inflation?

  • workers have to earn more money to maintain some standard of living
  • effects people of fixed income the most

2

What is a cause of deflation?

usually occurs in periods of recession and depression

3

output per person

GDP per capita

4

person who owes money

debtor

5

What are the causes of inflation?

  • demand for goods and services is greater than supply
  • when large supply of money is spent for goods that are in short supply

6

the total dollar value of all final goods and service produced in a country during one year

Gross Domestic Product (GDP)

7

production output in relation to a unit of input

productivity

8

increase in the general level or prices

inflation

9

the phase in which unemployment begins to decrease

recovery

10

sales of durable and non-durable goods brought by consumers

retail sales

11

  • a person that purchases a corporate or government bond
  • this means you have lent money to the organization and in return are paid interest for the use of your money

creditor

12

How do interest rates affect business activities?

  • if interest rates are high then will have higher business costs
  • if rate is low, then lower business costs

13

When do we pay interest?

we pay interest when we borrow money

14

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

depression

15

the portion of people in the labor force who is not working

unemployment rate

16

period in which most peoplewho want to work are working, businesses produce goods and services and the rate of GDP growth increases

prosperity

17

What is an effect of deflation?

prices of products are lower but people have less money to buy them

18

When do we receive interest?

when we give money to invest, this is our fee for giving it

19

movement of economy from one condition to another and back again

business cycle

20

all people above age 16 who are actively workign or seeking work

labor force

21

government spends more than it takes in

budget deficit

22

What are the economic indicators for spending?

  • Consumer Spending - the money you earn and spend
  • Retail Sales - the sales of durable and nondurable goods bought by consumers
  • Unemployment rate - the portion of people in the labor force who are not working
  • Gross National Product - GNP - the total market value of goods and services produced by the residents of a country, even if they live abroad
  • Gross Domestic Product - GDP - the total dollar value of the final goods and services produced in a country each year
  • GDP per Capita - the output per person, calculated by dividing GDP by total population

23

total amount owed by federal government

National Debt

24

the interest rate individuals pay to borrow for the purchase of a new home

mortgage rate

25

What are the 4 phases of the business cycle?

  1. Prosperity phase
  2. Recession phase
  3. Depression phase
  4. Recovery phase

26

represents debt for an organization

bond

27

refers to money spent by business for an item over long period of time

capital project

28

a decrease in the general level of prices

deflation

29

stock ownership, means ownership

equity

30

What causes interest rates to change?

the supply and demand for money

31

a number that compares prices in one year with prices in an earlier base year; measures inflation

Consumer Price Index

32

the interest rate banks make available to their best business customers like large corporations

prime rate

33

What is interest?

the cost of borrowing or lending money

34

refers to salaries and wages as well as investment income and government payments to individuals

personal income

35

a number that compares prices in one year with some earlier base year

price index

36

period in which demand begins to decrease

recession

37

represents ownership in a corporation

stock

38

government may spend less than it takes in

budget surplus