Ch.2 Economic Activity Flashcards
Gross Domestic Product (GDP)
The total value of all final goods and services produced in a country in one year.
GDP per capita
A country’s GDP divided by the population.
Durable Goods
Goods used for more than three years.
Nondurable Goods
Goods used for less than three years.
Unemployment
The portion of people over sixteen who are not working but are looking for a job. It varies by region and time.
Inflation
An increase in the general level of prices which are primarily caused when the demand for a good or service is greater than the supply. It is very harmful for people with fixed incomes.
Deflation
A decrease in the general level of prices when the demand for a product or service is less than the supply. It can often be caused by the people having lower salaries and income than usual.
Consumer Price Index (CDP)
Used to measure inflation by comparing the history of prices to the current ones.
Retail Sales
An indicator of the general spending patterns (demand) in an economy. Also measures durable and nondurable goods.
Productivity
The production output in relation to a unit of input. It can be increased by the improvement of capital resources, worker training and management techniques.
Business Cycle
The reoccurring ups and downs in an economy.
Prosperity
The peak of the business cycle.
- unemployment is low
- businesses produce products in record numbers
- GDP growth is high until the economy slows.
Recession
Occurs when an economy slows down,
- business lower production
- demand starts to increase
- unemployment begins to rise
- GDP slows for more than two quarters of the year (one quarter equals 3 months
Can often signal trouble for workers in related businesses (producers of products that are materials to make other products).
