Economics Chapter 11

TFP

output per unit of all production units

Sole Proprietorship

simplest form of business organization; has 1 owner

Partnership

2 or more owners

Corporation

legal construct owned by shareholders

LLC

combines a partnership and a corporation

Business Cycle

changes in levels of economic activity over time

GDP

value of all finished goods and services produced within a country during a year’s time

GNP

vale of finished goods and services produced by a nation’s citizens during a year’s time

Peak

the highest point of the expansion

Recession

period of economic decline; GDP is low for 2 months or longer

Trough

the lowest point

Depression

an especially severe recession

Demand-pull Inflation

demand becomes greater than supply resulting in shortages

Cost-push Inflation

production cost increases, so product price increases

CPI

the most used tool to measure inflation

Base Period

time period that has been chosen when the prices of goods are set to 100%, currently 1982-1984 (CPI is compared to the base period)

Stagflation

High levels of inflation combined with high unemployment (results in stagnancy of production)

Supply-side Economics

cutting taxes to make more money available for savings, R&D, hiring new employees, etc.

SSE

implemented by Ronald Reagan

1982-1984

What time period was chosen when the prices of goods are set to 100%

Ronald Reagan

Who implemented SSE

Budget

a spending plan that ensures you can pay for the things you need

Balanced Budget

income equals expenses

Will

how an estate is to be divided among people or organization

Living Will

directs a healthcare professional what to do should a person become incapacitated

Health Care Power of Attorney

makes health care decisions for an individual if the person becomes incapacitated and is not able to make a decision for themselves

Financial Power of Attorney

gives someone else the right to make financial decisions for a person and control hsi finances when he can’t for himself