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Budget Deficit when the government spends more money than it collects in taxes Budget Surplus a situation in which the government takes in more than it spends Business Cycle fluctuations in economic activity, such as employment and production Deflation a decrease in the average price of all goods and services Depression a long-term economic state characterized by unemployment and low prices and low levels of trade and investment GDP Gross Domestic Product- the total market value of all final goods and services produced annually in an economy Inflation increased prices for goods and services combined with the reduced value of money National Debt the amount of money a national government owes to other governments or its people Prosperity an economic state of growth with rising profits and full employment Recession An economic slowdown of the economy which results in rising unemployment, increased business failures, declining economic growth and higher personal bankruptcies. Recovery the phase in which unemployment begins to decrease, demand for goods and services increases, and GDP begins to rise again Standard of Living a measure of quality of life based on the amounts and kinds of goods and services a person can buy