Intro to Business: Chapter 2: Economic Activity
Review Guide
How do interest rates affect you and other consumers?
○ A: Higher interest rates mean banks are willing to pay more interest
on their deposit accounts, but this also means that the cost of
borrowing will likely be greater.
A decrease in the general price level is called?
○ A: An increase in the general (average) price level of goods and
services in the economy. deflation.
How do interest rates affect business activities in economy?
○ A:When consumers pay less in interest, this gives them more money
to spend, which can create a ripple effect of increased spending
throughout the economy.
What is the difference between gross domestic product (GDP) and GDP per
Capita?
A : Gross domestic product (GDP) - the market value of all finished
goods and services produced w/ in a country in a year
GDP per capita - the output per person
Reduction of the general level of prices in an economy is called?
A: Deflation
National Debt is the total amount owed by?
A: Federal government
When consumers increase their borrowing, interest rates tend to decline. True or
false.
A: False
What cycle is the worst part of a business?
A: Recession
When businesses want their business to go well they raise their prices on their
products . What is this called?
A: Inflation
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Intro to Business: Chapter 2: Economic Activity
Review Guide
True or false :Business cycles are the recurring ups and downs of GDP
A: True
____ occurs when the demands for goods and services is greater than the
supply
A. unemployment B.productivity C. inflation D.retail sales
A: C
Which of the following means ownership?
A. bond B. stock. C. equity D. capital projects
A: C
How do interest rates affect business activities in economy?
A: When consumers pay less in interest, this gives them more money to
spend, which can create a ripple effect of increased spending throughout
the economy. Businesses and farmers also benefit from lower interest
rates, as it encourages them to make large equipment purchases due to
the low cost of borrowing.
What are the main sources of personal income?
A: wages, bonuses, dividends, interest, rent and government or business
transfer payments
How do interest rates affect consumers?
A: Higher interest rates mean banks are willing to pay more interest on
their deposit accounts, but this also means that the cost of borrowing will
likely be greater. When the economy is slowing. This generally means
companies are less profitable, unemployment is rising and consumers are
reining in their spending.
True or false.Deflation results in lower buying power of money.
A:False
True or false. When consumer increase their borrowing,interest rates tend to
decline.
A:True
The phase of the business cycle in which unemployment is highest is?
A:Depression
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Intro to Business: Chapter 2: Economic Activity
Review Guide
When the consumers increase their borrowing, what happens?
A: the interest rate goes up
How can you go into debt?
A: over using a credit card and spending the money that you don’t
have
What’s recession?
A: a period of temporary economic decline during which
trade and industrial activity are reduced, generally
identified by a fall in GDP in two successive quarters.
What does gdp stand for?
A: it’s short for gross domestic product
What are the causes of inflation?
A: While cost-push inflation is a supply-side issue,
demand-pull inflation occurs when high demand causes
rising prices. ... Currency devaluation can lead to higher
exports (as our goods become suddenly less expensive
and thus more attractive to foreign buyers) and this
increases aggregate demand for our goods and services
Has the unemployment rate dropped or gone up?
A: The rate has gone down. The current unemployment rate in the US
Is 3.8%
Two key ways to increase your long term financial success.
A:Valid insurance and money income.
How is growth measured?
A:Improvement and stability.
Advantages of being a consumer in the market company.
A:Having to use what the market is providing and is available.
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Intro to Business: Chapter 2: Economic Activity
Review Guide
What is equity & how is it used?
A:Equity increases the more you pay down on a mortgage on your
house, and the equity you build may be accessed for your use via a
loan or a line of credit.
Who gets our tax money?
A: Our tax money goes to the government.
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