Business unit2 part 2

Regulation

Relying more on laws and policies than on market forces to govern economic activity

Deregulation

Removing regulations to allow the market to prevent excesses and correct itself over time

Monetary policy

Government policy and actions taken by the Federal Reserve Board to regulate the nation’s money supply

Fiscal policy

Strategy for the use of government revenue collection and spending to influence the business cycle

Economic indicators

Statistics that measure the performance of the economy

Leading and lagging

Gross domestic product (GDP)

The value of all the final goods and services produced by businesses located within a nation’s borders; excludes outputs from overseas operations of domestic companies

Inflation

An economic condition in which prices rise throughout the economy /The currency loses value

Deflation

An economic condition in which prices fall throughout the economy/The currency gains value

Consumer Price Index (CPI)

A monthly statistic that measures changes in the prices of a representative collection of consumer goods and services

Producer Price Index (PPI)

A statistical measure of price trends at the producer and wholesaler levels

Unemployment rate

The portion of the labor force (everyone over 16 who has or is looking for a job) currently without a job

Interest Rates

Cost of borrowing or reward for saving.

Federal funds rate

The interest rate that member banks charge each other to borrow money overnight from the funds they keep in the Federal Reserve accounts

Discount rate

The interest rate that member banks pay when they borrow funds from the Fed

Prime rate

The interest rate a bank charges its best loan customers

Recession

A period during which national income, employment, and production all fall; defined as at least six months of decline in the GDP

Business cycles

Fluctuations in the rate of growth that an economy experiences over a period of several years

Competition

Rivalry among businesses for the same customers