Chapter 2 Economics Flashcards

Vocabulary flashcards covering key macroeconomic concepts, business cycles, inflation, and government budgeting from Chapter 2.

Gross Domestic Product (GDP)

Total dollar value of all final goods and services produced in a year.

Factors Included in GDP

Consumer spending, business spending, government spending, and trade.

Factors Excluded from GDP

Work you do for yourself, goods and services resources, and used goods (resale).

Unemployed

Refers to people who don't seek work; related to a reduce in demand.

Prosperity

Stage of the business cycle where GDP goes up and the unemployment rate goes down.

Recession

Stage of the business cycle where GDP goes down and the unemployment rate goes up.

Depression

Stage of the business cycle where GDP goes down and the unemployment rate goes up.

Recovery

Stage of the business cycle where GDP goes up and the unemployment rate goes down.

Business Cycle Table

A table showing whether GDP and Unemployment Rate go up or down across the stages of Prosperity, Recession, Depression, and Recovery.

Inflation

An increase in prices that hurts people with fixed incomes, caused when demand for goods is higher than supply.

Deflation

The opposite of inflation, characterized by a decrease in prices.

Consumer Price Index

Measures inflation based on what an average person would buy, reflecting price increases when multiple people really like something.

Consumer Willingness Under Low Interest Rates

Consumers are more willing to buy items that require a loan because the interest rate wouldn't be as high.

Budget Deficit

Occurs when the government spends more than what they make.

Budget Surplus

Occurs when the government spends less than what they make.