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Saylor Business 101 With Complete Solutions
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Saylor Business 101 With Complete Solutions
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Saylor Business 101 With Complete SolutionsGross Domestic Product (GDP) Answer: The value of the total output of goods and services
produced in a country in a given time period (normally one year).
purchasing power parity (PPP) Answer: The amount of money needed in one country to purchase
the same goods and services in another country
GDP Income Approach Answer: Land (rent) + Labor (wages) + Capital (interest) + Entrepreneur
(Profits) = Total Income = GDP
GDP Expenditure Approach Answer: Consumption (household)
+ Investment (firm)
+ Government (spending )
+ X (exports − imports)
inflation rate Answer: the percentage rate of change in price level over time
Lagging Economic Indicators Answer: variables that follow, or trail, changes in overall economic
activity; examples include the interest rate and the average duration of unemployment
leading economic indicators Answer: Variables that predict, or lead to, a recession or recovery;
examples include consumer confidence, stock market prices, business investment, and big-ticket
purchases, such as automobiles and homes
, Consumer Confidence Index Answer: An indicator that measures the self-assurance of consumers
and is crucial in determining consumer spending habits that have a direct impact on business prospects
and the economy
3 economic goals for all countries Answer: Growth
High employment
Price stability
Business Cycle Answer: Alternating periods of economic expansion and economic recession. A cycle
can be divided into four general phases of prosperity, recession, depression (which the cycle generally
skips), and recovery:
consumer confidence Answer: An economic indicator measuring the degree of optimism that
consumers feel about the overall state of the economy and their personal financial situation.
Consumer Price Index (CPI) Answer: a measure of the overall cost of the goods and services bought
by a typical consumer
purchasing power Answer: The amount of goods and services that can be bought with a unit of
currency or by consumers.
monetary policy Answer: Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
contractionary policy Answer: Fiscal policy used to decrease aggregate demand or supply.
Deliberate measures to decrease government expenditures, increase taxes, or both. Appropriate during
periods of inflation. Decrease money supply and raise interest rates.
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