1. Glossary of Key Terms business cycle. A cycle of economic activity with periods called contraction, trough, recovery, and peak. collusion. When companies make illegal secret agreements, usually to engage in price fixing or to shut out smaller competitors. Back

2. Glossary of Key Terms consumer price index (CPI). A measurement of changes in the prices of selected consumer goods and services. deficit spending. When government spends more than it collects in tax revenues and must borrow money. depression. An extended period of economic recession. Back

3. Glossary of Key Terms Federal Reserve System. The U.S. government system that regulates the nation’s money supply and banking system. It is comprised of the Federal Reserve Board, 12 Federal Reserve Banks, and the Federal Open Market Committee. Back

4. Glossary of Key Terms fiscal policy. The government’s taxing and spending decisions. gross domestic product (GDP). The value of all goods and services produced by a nation during a specified period. inflation. An overall increase in the price of goods and services. Back

5. Glossary of Key Terms labor force. Composed of people, age 16 and over, who are employed or looking for and able to work. labor union. A group of workers who unite to negotiate with employers over issues such as pay, health care benefits, and working conditions. Back

6. Glossary of Key Terms monetary policy. Government actions that change the amount of money in circulation by controlling interest rates and credit terms. monopoly. A market situation in which one seller produces the entire output of a given product or service. national debt. The total amount the government owes at a given time. Back

7. Glossary of Key Terms oligopoly. A market situation in which a few large companies dominate an industry. perfect competition. A market structure in which competition between producers results in greater innovation, better service, lower prices, and efficient allocation of resources. Back

8. Glossary of Key Terms recession. An extended period of slow or no economic growth. stagflation. A period of slow growth and high inflation. tax. A fee imposed by a government on income, products, or activities, and paid by citizens and businesses. Back

9. Glossary of Key Terms underemployment. Workers who are employed only part time or who are “over qualified” for their jobs. unemployment rate. The percentage of the labor force that is out of work and seeking employment. Back