Intro to Business Chapter 2 Flashcards

Questions and Answers

The unscrambled vocabulary word for 'rutviiopdcyt' is ___.

productivity

The unscrambled vocabulary word for 'ctsko' is ___.

stock

The unscrambled vocabulary word for 'yitqeu' is ___.

equity

The unscrambled vocabulary word for 'orseisnec' is ___.

recession Signup and view all the answers

The unscrambled vocabulary word for 'ladfetnoi' is ___.

deflation Signup and view all the answers

The unscrambled vocabulary word for 'ertinsetetar' is ___.

interest rate Signup and view all the answers

The unscrambled vocabulary word for 'spytopirer' is ___.

prosperity Signup and view all the answers

The unscrambled vocabulary word for 'prixcedine' is ___.

price index Signup and view all the answers

The unscrambled vocabulary word for 'lftiinano' is ___.

inflation Signup and view all the answers

The unscrambled vocabulary word for 'fdegtubitedci' is ___.

budget deficit Signup and view all the answers

The unscrambled vocabulary word for 'vycrereo' is ___.

recovery Signup and view all the answers

The unscrambled vocabulary word for 'nycbeusciless' is ___.

business cycle Signup and view all the answers

What is the movement of the economy from one condition to another called?

business cycle Signup and view all the answers

What does stock represent?

ownership in a corporation Signup and view all the answers

What does interest represent?

the cost of money Signup and view all the answers

What is a period in which most people who want to work have a job called?

prosperity Signup and view all the answers

Which economic measure compares the prices of a group of selected items each year?

Consumer Price Index (CPI) Signup and view all the answers

What is the total dollar value of all final goods and services produced each year in a country?

gross domestic product (GDP) Signup and view all the answers

What is the monthly measure of all sales of durable and nondurable goods bought by consumers?

retail sales Signup and view all the answers

Which economic measure is the most widely used measure of national output?

gross domestic product (GDP) Signup and view all the answers

What is the percentage of people in the labor force who are looking for work but unable to find work called?

unemployment rate Signup and view all the answers

What is Gross Domestic Product?

the total value of all final goods and services produced in a country during one year Signup and view all the answers

What is GDP per Capita?

GDP divided by population Signup and view all the answers

What components make up GDP?

Consumer Spending, Business Spending, Government Spending, Exports - Imports Signup and view all the answers

What does the U.S. Labor Force consist of?

people who are 16 years and older who are actively working or seeking employment Signup and view all the answers

What does productivity refer to?

the production of output in relation to a unit of input Signup and view all the answers

What is Consumer Spending?

the total amount of money spent by consumers on goods and services Signup and view all the answers

What are the four phases of the business cycle?

Prosperity, Recession, Depression, Recovery Signup and view all the answers

What is inflation?

an increase in the general level of prices Signup and view all the answers

What is deflation?

a decrease in the general level of prices Signup and view all the answers

What is the prime rate?

the rate of interest banks make available to best business customers Signup and view all the answers

What is the discount rate?

the rate that financial institutions are charged by the Federal Reserve Bank to borrow funds Signup and view all the answers

What is the mortgage rate?

the rate that individuals pay to borrow to purchase a house Signup and view all the answers

What is a Certificate of Deposit (CD)?

the rate of timed deposits at saving institutions Signup and view all the answers

What are capital projects?

when companies spend money on equipment, land, and buildings Signup and view all the answers

What is personal savings?

monies used from savings accounts and those of businesses Signup and view all the answers

What does the stock market involve?

stock ownership means equity or ownership Signup and view all the answers

What does the bond market involve?

companies sell bonds which represent debt for an organization Signup and view all the answers

What does borrowing refer to?

"buy now, pay later" Signup and view all the answers

What is government debt?

the total amount of money owned by the federal government Signup and view all the answers

What does business debt include?

loans, bonds, and mortgages Signup and view all the answers

What does consumer debt include?

credit loans, home mortgages, student loans, car loans Signup and view all the answers

What is the Consumer Price Index (CPI)?

the most widely used measurement of inflation Signup and view all the answers

Study Notes

Vocabulary Terms and Definitions

Productivity: Measure of output relative to input, can be improved through technology, capital, training, and management.
Stock: Represents ownership in a corporation, indicating a stake in its profits and losses.
Equity: Represents ownership in assets after liabilities are deducted.
Recession: Economic decline characterized by reduced production and demand over two consecutive quarters.
Deflation: Reduction in the general price level of goods and services, often occurring in recessions.
Interest Rate: The cost of borrowing money, expressed as a percentage.
Prosperity: Economic phase with high employment, rising GDP, and significant production.
Price Index: Economic measure comparing prices over time for a selection of items, commonly the Consumer Price Index (CPI).
Inflation: Rise in general price levels, reducing purchasing power, and causing harm especially to those on fixed incomes.
Budget Deficit: Occurs when government expenditures exceed revenue, leading to national debt accumulation.
Recovery: Phase following a recession, marked by decreasing unemployment and increasing demand and GDP.

Economic Measures

Gross Domestic Product (GDP): Total value of all final goods and services produced within a country annually, crucial for economic analysis.
GDP per Capita: GDP divided by the population, indicating average economic output per person.
Consumer Price Index (CPI): The primary measure of inflation reflecting changes in the price level.
Retail Sales: Monthly measure of consumer purchases of durable and nondurable goods.
Unemployment Rate: Percentage of the labor force actively seeking but unable to find work.

Phases of the Business Cycle

Prosperity: High employment, increased production, and GDP.
Recession: Decline in production and GDP, lower demand, and increased unemployment.
Depression: Extended period of high unemployment and significantly reduced GDP.
Recovery: Gradual improvement in employment, demand, and GDP as confidence returns.

Interest Rates and Financial Instruments

Prime Rate: Interest rate offered to a bank's most creditworthy customers.
Discount Rate: Interest rate banks pay to borrow from the Federal Reserve.
Mortgage Rate: Interest rate homes are financed at.
Certificate of Deposit (CD): Timed deposits that earn interest at financial institutions.

Debt and Its Implications

Government Debt: Accumulated borrowing to fund services, which can lead to budget deficits or surpluses based on expenditure vs. revenue.
Business Debt: Involves loans, bonds, and mortgages; effective debt management is critical for health.
Consumer Debt: Includes various loans (credit, mortgages, etc.) that can lead to financial challenges if not managed responsibly.

Financial Markets

Stock Market: Platform for buying and selling equity shares, aiming for profit through increasing stock values.
Bond Market: Involves the sale of bonds representing debt, where buyers become creditors.

Summary of Consumer Spending

Major components include personal income from salaries, investment income, and government payments, reflective of economic health and consumer behavior.

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Description

Test your knowledge of key vocabulary from Chapter 2 of Intro to Business. This quiz includes vocabulary terms and definitions related to economic concepts and the business cycle. Perfect for students looking to reinforce their understanding of the chapter's material.