Guided Reading Questions for Economy Matters

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Discussion questions and glossary for Economy Matters article "Keeping Up with the Gazelles, Part 1: Is the Herd Thinning?"

Glossary of terms

401(k) plan is a defined contribution plan in which an employee can make contributions from his or her paycheck either before or after tax, depending on the options offered in the plan. 

Angel investor is a wealthy individual who provides financial capital for a new business with his or her own money in exchange for a potential return on investment.

Bonding ensures that a business performs the work for which they have been contracted and protects against any losses from damage done by the firms' employees.

Business incubators are organizations that assist new businesses in their initial stages of operations by providing a variety of support resources and services. 

Collateral is something of value pledged by a borrower as a promise that a loan will be repaid.

Credit is the sum of money that a lender makes available to a borrower. Usually, the borrowed money must be paid back with interest.

Creditworthiness refers to an individual's or business's capacity to borrow. This assessment comes from an individual's credit history and credit score and a business's credit rating. 

Crowdfunding is the pooling of small amounts of capital from many investors to finance a business venture or project.

Employer firms are businesses with at least one employee who is not an owner, according to the U.S. Census Bureau.

Entrepreneur is a person who takes the initiative to organize, operate, and assume the risks for any business venture.

Equity financing is a process of raising financial capital by selling shares in a company, also called stock, to investors.

Gazelles are high-growth businesses commonly characterized as having a growth rate of 20 percent or more per year in sales revenue.

Great Recession was the steep downturn in the economy from late 2007 to June 2009. It is considered the most significant economic decline since the Great Depression. 

Home equity line of credit allows a homeowner to borrow money against the value that has been built up in their home with the home serving as collateral or a pledge of repayment.

Recession is a period of economic decline, usually measured by two consecutive quarters of contraction in GDP, gross domestic product.

Start-ups are newly formed businesses in the initial phase of operations. 

Venture capital is money provided by investors to new businesses that wish to expand but do not have access to capital markets. Investors who provide venture capital funds are exposed to significant amounts of risk in exchange for potentially substantial returns on their investment.

Questions to accompany the article:

  • Approximately what percent of businesses are small, employing fewer than 50 people?
  • According to a growing body of research, what may be more important for businesses' economic performance than their size?
  • What seems to have been the impact of the Great Recession on business formation in the United States? (Provide supporting evidence from the article.)
  • What is a top challenge facing small firms, according to a recent Federal Reserve survey of small businesses?
  • What is meant when the author writes that the "gazelle herd is thinning"?
  • What are some factors that foster entrepreneurship?

Lesson Component