| A | B |
|---|
| Business cycle | Alternating periods of economic expansion and economic recession. |
| Long-run economic growth | The process by which rising productivity increases the average standard of living. |
| Labor productivity | The quantity of goods and services that can be produced by one worker or by one hour of week. |
| Capital | Manufactured good that are used to produce other goods and services. |
| Potential GDP | The level of real GDP attained when all firms are producing at capacity. |
| Financial system | The system of financial markets and financial intermediaries through which firms acquire funds from households. |
| Financial Market | Markets where financial securities, such as stocks and bonds, are bought and sold. |
| Financial Interediaries | Firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers. |
| Market for loanable funds | The interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged. |
| Crowding out | A decline in private expenditures as a result of an increase in government purchases. |
