Econ Test

Business cycle

Periodic growth and decline of a nation’s economy measured mainly by GDP

Expansion

Steady growth in economic activity shown by rising employment company profits and stock values

Contraction

A decline in economic growth shown by rising unemployment lower profits and falling stock prices

Stock Market

Place where shares are bought and sold centered on Wall Street and mostly online today

Share

A percentage of ownership in a company

Stock

A certificate representing ownership in a company

Laws of supply and demand

When supply is up and demand is down prices fall when supply is down and demand is up prices rise

Wall Street

The New York Stock Exchange and a term used for the stock market in general

Bull Market

A rising and healthy stock market

Bear Market

A slowing or declining stock market

Interest

Money earned by banks for lending money

Dividend

A portion of a company’s profit paid to shareholders quarterly or annually

Buying on the margin

Buying stock by paying part of the cost and borrowing the rest which increases risk if prices fall

Credit

Buying goods now and paying over time which increases consumer spending but can cause debt

Revenue

Income a company earns from sales

GDP

Total value of goods and services produced by a country in one year

Capitalism

Economic system with private ownership free markets and limited government involvement

Communism

Economic system with no private property where the government controls resources and provides for citizens

Socialism

Economic system where the government provides services like healthcare education and housing

Totalitarianism

System where one ruler or party has total control and citizens have few freedoms

Inflation

Rise in prices over time compared to wages

Subsidy

Government financial assistance given to industries to help them survive economic downturns

IPO

Initial Public Offering when a company first sells stock to the public

Inventory

Goods produced and stored for sale

Installment payment plan

Paying for an item through monthly payments

Assembly Line

Henry Ford’s mass production system that lowered prices and increased buying power

Bank Run

When many depositors withdraw money at the same time causing panic

Stock Crash of 1929

Panic selling in October 1929 that caused stock prices to collapse

Recession

Two or more consecutive quarters of economic decline

Deficit Spending

Spending more money than the government collects in taxes

Keynesian economics

Government spending during recessions to stimulate the economy and create jobs

Laissez-faire economics

Belief that the government should not interfere much in the economy

Work Projects

Temporary government jobs that build infrastructure and reduce unemployment

National Debt

Total accumulation of deficit spending over time