Business 101: Chapter 2
Budget deficit - ANS-Shortfall that occurs when expenses are higher than revenue over
a given period of time.
Budget surplus - ANS-Overage that occurs when revenue is higher than expenses over
a given period of time.
Business cycle - ANS-The periodic contraction and expansion that occur over time in
virtually every economy.
Capitalism - ANS-An economic system—also known as the private enterprise or free
market system— based on private ownership, economic freedom, and fair competition.
Commercial banks - ANS-Privately owned financial institutions that accept demand
deposits and make loans and provide other services for the public.
Communism - ANS-An economic and political system that
calls for public ownership of virtually all enterprises, under the direction of a strong
central government.
Consumer Price Index (CPI) - ANS-A measure of inflation that evaluates the change in
the weighted-average price of goods and services that the average consumer buys
each month.
Contraction - ANS-A period of economic downturn, marked by rising unemployment and
falling business production.
Deflation - ANS-A period of falling average prices across the economy.
Demand - ANS-The quantity of products that consumers are willing to buy at different
market prices.
Demand Curve - ANS-The graphed relationship between price and quantity from a
customer demand standpoint.
Depression - ANS-An especially deep and long-lasting recession.
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