Semester 2

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!