| budget deficit | The amount by which government spending exceeds government revenues.
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| business cycle | Repetitive cycles of recession and recovery.
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| cyclical industries | Industries with above-average sensitivity to the state of the economy.
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| defensive industries | Industries with little sensitivity to the state of the economy.
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| degree of operating leverage | Percentage change in profits for a 1% change in sales.
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| demand shock | An event that affects the demand for goods and services in the economy.
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| exchange rate | Price of a unit of one country's currency in terms of another country's currency.
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| fiscal policy | The use of government spending and taxing for the specific purpose of stabilizing the economy.
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| fundamental analysis | Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates, and risk evaluation of the firm.
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| gross domestic product | The market value of goods and services produced over time including the income of foreign corporations and foreign residents working in the United States, but excluding the income of U.S. residents and corporations overseas.
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| industry life cycle | Stages through which firms typically pass as they mature.
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| inflation | The rate at which the general level of prices for goods and services is rising.
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| leading economic indicators | Economic series that tend to rise or fall in advance of the rest of the economy.
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| monetary policy | Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.
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| peak | The transition from the end of an expansion to the start of a contraction.
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| sector rotation | An investment strategy which entails shifting the portfolio into industry sectors that are forecast to outperform others based on macroeconomic forecasts.
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| SIC codes | Standard Industry Classification. These codes are assigned by the U.S. government for the purpose of grouping firms for statistical analysis.
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| supply shock | An event that influences production capacity and costs in the economy.
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| trough | The transition point between recession andrecovery.
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| unemployment rate | The ratio of the number of people classified as unemployed to the total labor force.
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