Chapter 2: How Economics Affects Business Flashcards Preview

Introduction to Business > Chapter 2: How Economics Affects Business > Flashcards

Flashcards in Chapter 2: How Economics Affects Business Deck (32):
1

Economics

The study of how society chooses to employ resources to produce goods and services and to distribute then for consumption.

2

Macroeconomics

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

3

Microeconomics

Looks at the behavior of people and organizations in particular markets

4

Resource Development

The study of how to increase resources and to create the conditions that will make better use of those resources

5

"Invisible Hand"

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all

6

Capitalism

An economic system in which all or most of the factors of production and distribution (land, factories, railroads, and stores) are privately owned and operate for profit

7

Supply

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

8

Demand

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

9

Market price

The price determined by supply and demand

10

Perfect competition

There are many sellers in a market and no seller is large enough to dictate price

11

Monopolistic competition

A large number of sellers produce products that are very similar but are perceived by buyers as different

12

Oligopoly

Just a few sellers dominate a market

13

Monopoly

There is only one seller of a product or service

14

Brain Drain

The loss of the best and brightest people to other countries

15

Communism

Economic and political system in which the state makes all economic decisions and owns all major factors of production

16

Free market economics

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

17

Command economics

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

18

Mixed economics

Some allocation of resources are made by the government and some by the market

19

Socialism

Based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be evenly distributed among the people.

20

Gross domestic product

Total value of final goods and services produced in a country in a given year

21

Unemployment rate

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

22

Inflation

A general rise in the prices of goods and services over time

23

Disinflation

Price increases are slowing, or the inflation rate is declining

24

Deflation

Prices are declining

25

Consumer price index

Monthly statistics that measure the pace of inflation or deflation

26

Producer price index

An index that measures prices at the wholesale level

27

Business cycles

The periodic rises and falls that occur in all economies over time

28

Recession

Two or more consecutive quarters of decline in the GDP

29

Depression

A severe recession

30

Fiscal policy

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or spending

31

National debt

The sum of government deficits over time

32

Monetary policy

Management of the money supply and interest rates