Chapter 2 Terms

Prosperity

A period in which most people who want to work have a job, wages are good, businesses are producing a record number of goods, and the rate of gross domestic product (GDP) is increasing.

Productivity

Can be increased by an improvement in management techniques.

Deflation

Although there is an increase in prices, people have less money to buy products.

Budget Deficit

A situation where a government spends more money than it takes in over a period of time.

Recession

A period in which unemployment begins to rise, demand begins to decrease, and businesses lower production.

Inflation

An increase in prices and a decrease in the buying power of the dollar.

Interest

Represents the cost of money.

Recovery

A phase represented by an increase in employment, demand for goods, and the GDP.

Business Cycle

Movement of the economy from one condition to another.

Stock

Represents ownership in a corporation.