Chapter 1 vocab

Question 1

What is inflation?

Answer 1

Annualized rate of change in the price level over a period

Question 2

What is unemployment?

Answer 2

Person above a specified age not being in paid employment but are available for work

Question 3

What is investment?

Answer 3

Allocate money in expectation of some benefit in the future

Question 4

What is saving?

Answer 4

Amount left over after an individual’s consumer spending is subtracted from the amount of disposable income earned in each period

Question 5

What is GDP?

Answer 5

Monetary value of all finished goods and services made within a country during a specific period

Question 6

What is wage rate?

Answer 6

Amount paid to a worker per unit of time

Question 7

What is interest rate?

Answer 7

Amount a lender charges for the use of assets expressed as a percentage of the principal

Question 8

What is business cycle?

Answer 8

Short-run contractions and expansions in economic activity

Question 9

What is recession?

Answer 9

2 consecutive quarters of negative GDP growth

Question 10

What is deflation?

Answer 10

When prices of most goods and services decline

Question 11

What is inflation rate?

Answer 11

Annualized percentage increase in the level of prices

Question 12

What is hyperinflation?

Answer 12

An extremely high rate of inflation

Question 13

What is an open economy?

Answer 13

Extensive trading and financial relationships with other national economies

Question 14

What is a closed economy?

Answer 14

Does not interact economically with the rest of the world

Question 15

What is trade surplus?

Answer 15

Exports > imports

Question 16

What is trade deficit?

Answer 16

Imports > exports

Question 17

What is net exports?

Answer 17

Exports - imports

Question 18

What are exports?

Answer 18

Goods produced in the country purchased by foreigners

Question 19

What are imports?

Answer 19

Goods produced abroad that are purchased by residents in the country