1. Semester 2
Vocabulary terms

2. 1. Gross Domestic PRoduct
A measure of the total output of goods and services that are produced by a country.

3. 2. inflation
Inflation occurs when prices rise. Low inflation is characteristic of a stable economy.

4. 3. Law of diminishing returns
With each additional variable input, output increases at a diminishing rate

5. 4. demand
The amount of an item that consumers are willing to buy at a given price.

6. 5. supply
The amount of an item that producers are willing to produce at a given price.

7. 6. Cost of goods sold
The amount spent to produce and purchase gods that are sold in a business

8. 7. Fixed expenses
Business expenses that are always the same no matter how many units are produced.

9. 8. Net sales
Total sales minus returns and allowances

10. 9. gross sales
The total of all sales during a time period

11. 10. Economic goods
Tangible items of monetary value. Examples: pizza, sneakers, and cars.

12. 11. Sole proprietorship
A business owned by a single owner that provides money and skill to run the business.
You control the shots and make the money
You are personally liable for all debts

13. 12. partnership
A business that is owned by two or more people that are bound in a legal agreement. All partners are jointly responsible for the success or failure of the business.
You are held accountable for your partners mistakes
2 heads (and money) are better than one

14. 13. corporation
A legal entity that is owned by several people (stockholders) that have limited liability.
Big Bucks
Experienced board that makes decisions through voting (can be good or bad)

15. 14. franchisee
The owner of a franchise

16. 15. franchisor
The owner of the parent company that grants the rights to use their name and products.

17. 16. franchise
The owner of a franchise

18. 17. General partnership
Each partner has unlimited liability

19. 18. limited partnership
Each limited partner Is only liable for debt up to the amount they have invested in the business.

20. 19. liability
All the money that is owed to others by a business.

21. 20. asset
All items that have cash value that are owned by the business.
What does the term “liquidation of assets” mean?

22. 21. expense
Variable expenses – change base don the number of units produced.
Fixed expenses – do not change based on the number of units produced.

23. 22. Budget
A plan to mange finances

24. 23. gaap
Generally accepted accounting principles refers to the standard guidelines used in financial accounting.
If you stray too far away from these guidelines (get “creative” with your tax deductions, etc.) you could trigger a red flag.

25. 24. ethics Values and principles that guide decisions.
Unethical does not mean illegal

26. 25. equity
Refers to an individual’s value as a stockholder within a company.

27. Test Time
If you understand the 50 ways to drive traffic to a website along with these 25 terms, you will do fantabulous on the test!