Chapter 1

Question 1

brain drain

Answer 1

loss of the best and brightest people

Question 2

Communism

Answer 2

economic and political system in which government makes almost all economic decisions and owns almost all the major factors of production

Question 3

capitalism

Answer 3

all or most factors of production and distribution are owned by individuals

Question 4

invisible hand

Answer 4

the process that turns self-directed gain into social and economic benefits for all when a person prospers

Question 5

Under free market capitalism, people have four basic rights:

Answer 5

1. The right to own property 2. The right to own a business and keep all that business’s profits 3. The right to freedom of competition 4. The right to freedom of choice

Question 6

Socialism

Answer 6

economic system based on the premise that some, if not most, basic business should be owned by the government so that profits can be more evenly distributed among the people.

Question 7

Business

Answer 7

any activity that seeks to provide goods and services to others while operating at a profit

Question 8

Goods

Answer 8

tangible products such as computers, food, clothing, cars and appliances

Question 9

Services

Answer 9

intangible products such as education, healthcare, insurance, recreation, and travel and tourism.

Question 10

Revenue

Answer 10

total amount of money a business take in during a given period by selling goods and services

Question 11

Profit

Answer 11

The amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation

Question 12

Loss

Answer 12

A loss occurs when a business’s expenses are more than its revenues

Question 13

Entreprenuer

Answer 13

A person who risks time and money to start and manage a business

Question 14

Risk

Answer 14

the chance an entrepreneur takes of losing time and money on a business that may not prove to be profitable.

Question 15

Standard of living

Answer 15

refers to the amount of goods and services people can buy with the money they have

Question 16

Stakeholders

Answer 16

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

Question 17

Nonprofit organization

Answer 17

an organization whose goals do not include making a personal profit for its owners or organizers

Question 18

Business environment

Answer 18

consists of surrounding factors that either help or hinder the development of business

Question 19

What are the five elements of the business environment?

Answer 19

1. economic and legal 2. technological 3. competitive 4. social 5. global

Question 20

Effectiveness

Answer 20

producing the desired result

Question 21

efficiency

Answer 21

producing goods and services using the least amount of resources

Question 22

Productivity

Answer 22

the amount of output you generate given the amount of input

Question 23

Demography

Answer 23

the statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.

Question 24

Economics

Answer 24

the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals

Question 25

macroeconomics

Answer 25

looks at the operation of a nation's economy as a whole

Question 26

microeconomics

Answer 26

looks at the behavior of people and organizations in markets for particular products or services.

Question 27

Resource development

Answer 27

the study of how to increase resources

Question 28

factors of production

Answer 28

are the resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge

Question 29

command economies

Answer 29

the government largely decides what goods and services will be produced, who gets them, and how the economy will grow

Question 30

Free-market economies

Answer 30

the market largely determines what goods and services get produced, who gets them, and how the economy grows

Question 31

Supply

Answer 31

refers to the quantities of products manufacturers or owners are willing to sell at different prices at a specific time.

Question 32

Demand

Answer 32

refers to the quantity of products that people are willing to buy at different prices at a specific time

Question 33

Market price

Answer 33

determined by supply and demand. It is the price toward which the market will trend

Question 34

Perfect competition

Answer 34

exists when there are many sellers in a market and none is large enough to dictate the price of a product

Question 35

Monopolistic competition

Answer 35

large number of sellers produce very similar products that buyers nevertheless perceive as different

Question 36

Oligopoly

Answer 36

a degree of competition in which just a few sellers dominate the market

Question 37

Monopoly

Answer 37

one seller controls the total supply of a product or service, and sets the price

Question 38

Gross domestic product

Answer 38

total value of goods and services produced in a country in a given year

Question 39

unemployment rate

Answer 39

percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks

Question 40

Inflation

Answer 40

general rise in the prices of goods and services over time

Question 41

Disinflation

Answer 41

occurs when price increases start slowing

Question 42

Deflation

Answer 42

prices are declining

Question 43

Stagflation

Answer 43

economy is slowing but prices are going up somehow

Question 44

consumer price index (CPI)

Answer 44

monthly statistics that measure the pace of inflation and deflation

Question 45

core inflation

Answer 45

CPI minus food and energy costs

Question 46

producer price index

Answer 46

measures the change in prices at the wholesale level

Question 47

recession

Answer 47

two or more consecutive quarters of decline in GDP

Question 48

depression

Answer 48

a severe recession, usually accompanied by deflation

Question 49

Fiscal policy

Answer 49

refers to federal governments efforts to keep the economy stable by increasing or decreasing taxes or government spending

Question 50

Keynesians economic theory

Answer 50

theory that a government policy of increasing spending and cutting taxes could stimulate the economy in recession

Question 51

National debt

Answer 51

the sum of government deficits over time

Question 52

monetary policy

Answer 52

management of the money supply and interest rates by the Federal Reserve Bank

Question 53

What are the two branches of economics?

Answer 53

Macroeconomics and microeconomics

Question 54

What are the the most important factors of production?

Answer 54

Entrepreneurship and knowledge

Question 55

What are the key economic indicators in the US?

Answer 55

Gross domestic product (GDP) and consumer price index (CPI)

Question 56

What are the four phases of business cycles?

Answer 56

Economic boom, recession, depression, recovery

Question 57

What is the history of economic development in the US?

Answer 57

Agricultural workers displaced by improve tech. Then, manufacturing productivity improved which also displaced workers. This led to the development of the service industry. The service industry is now giving way to an information-based global revolution.