Chapter 2 test

Question 1

an increase in the general level of prices

Answer 1

inflation

Question 2

spending by businsses for items such as land, buildings, equipment and new products

Answer 2

capital projects

Question 3

a financial situation that occurs when a government spends less than it takes in

Answer 3

budget surplus

Question 4

the production output in relation to a unit of input, such as a worker

Answer 4

productivity

Question 5

the amount individuals pay to borrow for the purchase of a home

Answer 5

morgage rate

Question 6

the phase of the business cycle in which demand begins to decrease, businesses lower production, unemployment begins to rise, and gross domestic product growth slows for two or more quarters of the calendar year

Answer 6

recession

Question 7

the output per person, calculated by dividing gross domestic product (GDP) by the total production

Answer 7

GDP per capita

Question 8

the peak of the business cycle, it is 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 gross domestic product growth increases

Answer 8

prosperity

Question 9

the sales of durable and nondurable goods bought by consumers

Answer 9

retail sales

Question 10

the cost of borrowing for large US corporations

Answer 10

corporate bond rate

Question 11

ownership in a corporation

Answer 11

stock

Question 12

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

Answer 12

gross domestic product (GDP)

Question 13

the movement of the economy from one condition to another and back again. it has four phases including prosperity, recession, depression and recovery

Answer 13

business cycle

Question 14

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

Answer 14

personal income

Question 15

the total amount owed by the federal government

Answer 15

national debt

Question 16

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

Answer 16

labor force

Question 17

the rate financial institutions are charged to borrow funds from the federal reserve banks

Answer 17

discount rate

Question 18

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

Answer 18

personal income

Question 19

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

Answer 19

price index / consumer price index

Question 20

the yield on long term (20 year) US government debt obligations

Answer 20

treasury bond rate

Question 21

the rate for six month time deposits at savings institutions

Answer 21

certificate of deposit rate

Question 22

represents debt for an organization

Answer 22

bond

Question 23

the total amount owed by the federal government

Answer 23

national debt

Question 24

the yield on short term (13 week) US government debt obligations

Answer 24

t-bill rate

Question 25

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

Answer 25

unemployment rate

Question 26

a financial situation that occurs when a government spends more than it takes in

Answer 26

budget deficit

Question 27

an increase in the general price level

Answer 27

inflation

Question 28

the phase in the business cycle in which unemployment begins to decrease, demand for goods and services increases, and gross domestic product begins to rise again

Answer 28

recovery

Question 29

the phase of the business cycle that is marked by a prolonged period of high unemployment, weak consumer sals, and business failures

Answer 29

depression

Question 30

the movement of an economy from one condition to another and back again

Answer 30

business cycle

Question 31

a decrease in the general price level

Answer 31

deflation

Question 32

places where consumer incomes and buying power are increasing because of economic expansion

Answer 32

emerging markets

Question 33

a phase marked by a long period of high enemployment, weak consumer sales and business failures

Answer 33

depression

Question 34

production output in relation to a unit of input, such as a worker

Answer 34

productivity

Question 35

what are the 4 phases of a business cycle?

Answer 35

* prosperity * recession * depression * recovery

Question 36

a period in which demand, production, and GDP growth decrease and unemployment begins to rise

Answer 36

recession

Question 37

spending by businesses for items such as land, buildings and equipment

Answer 37

capital project

Question 38

government spends less than it takes in

Answer 38

budget surplus

Question 39

the phase in which unemployment decreases, demand for goods and services increases, and GDP begins to rise

Answer 39

recovery

Question 40

the sales of durable and nondurable goods bought by consumers

Answer 40

retail sales

Question 41

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

Answer 41

unemployment rate

Question 42

the rate banks make available to their best business customers, such as large corporations

Answer 42

prime rate

Question 43

government spends more than it takes in

Answer 43

budget deficit

Question 44

the total value of all final goods and services produced in a country in one year

Answer 44

GDP

Question 45

the GDP divided by the total population of a country

Answer 45

GDP per capita

Question 46

How do you calculate GDP per capita?

Answer 46

divide GDP by the population

Question 47

a certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified due date

Answer 47

bond

Question 48

represents ownership in a corporation

Answer 48

stock

Question 49

a period in which unemployment is low, businesses produce many goods and services, and wages are good

Answer 49

prosperity

Question 50

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

Answer 50

price index

Question 51

a decrease in the general level of prices

Answer 51

deflation