1. Chapter 3 Key Terms

2. Gross Domestic Product (GDP) The total value of the goods and services produced in a country in a given year.

3. Standard of Living The level of material comfort as measured by the goods and services that are available.

4. Inflation A general increase in the cost of goods and services.

5. Deflation A general decrease in the cost of goods and services.

6. Budget Deficit When the government spends more on programs than it collects in taxes.

7. National Debt The total amount of money a government owes.

8. Budget Surplus A situation in which a government’s revenue exceeds its expenditures during a one-year period.

9. Business Cycle The rise and fall of economic activity over time.

10. Prosperity A peak of economic activity.

11. Recession A slowdown of economic activity.

12. Depression A deep recession that affects the entire economy and lasts for several year.

13. Unemployment Rate A measure of the number of people who are able and willing to work but cannot find work during a given period.

14. Recovery A rise in business activity after a recession or depression.