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Flashcards in Understanding Business Chapter 2 Deck (34):
1

Economics

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

2

Macroeconomics

A part of economics that looks at the operation of a nation's economy as a whole

3

Microeconomics

The part of economics that looks at the behavior of people and organizations in particular markets

4

Invisible Hand

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

5

Capitalism

Economic system in which all or most of factors of production and distribution are privately owned and operated for profit

6

Supply

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

7

Demand

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

8

Market Price

The price determined by supply and demand.

9

Perfect Competition

Market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product

10

Monopolistic Competition

Market situation in which a large number of sellers produce products that are very similiar but that are perceived by buyers as different

11

Oligopoly

A form of competition in which just a few sellers dominate the market

12

Monopoly

A market in which there is only one seller for a product or service.

13

Socialism

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

14

Brain Drain

Loss of the best and brightest people to other countries

15

Communism

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

16

Free-Market Economies

Economic system in which the market largely determines what goods and services get produced. who gets them. and how the economy grows.

17

Command Economies

Economic system in which the government largely decides what goods and services will be produced. who gets them. and how the economy grows.

18

Mixed Economies

Economic system in which some allocation of resources is made by the market and some by the government.

19

Gross Domestic Product (GDP)

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

20

Unemployment Rate

Number of civilians at least 16 years who have been trying to find a job within the prior four weeks.

21

Inflation

General rise in the prices of goods and services over time.

22

Deflation

A situation in which prices are declining

23

Business Cycles

Periodic rises and falls that occur in all economies over time.

24

Recession

Two or more consecutive quarters of decline in the GDP.

25

Depression

A severe recession.

26

Consumer Price Index (CPI)

monthly statistics that measure the pace of inflation or deflation

27

Disinflation

a situation in which price increases are slowing (the inflation rate is declining)

28

Fiscal Policy

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

29

Keynesian Economic Theory

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

30

Monetary Policy

The management of the money supply and interest rates by the federal reserve.

31

National Debt

The sum of government deficits over time.

32

Producer Price Index (PPI)

An index that measures prices at the wholesale level.

33

Resource Development

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

34

Stagflation

A situation when the economy is slowing but prices are going up anyhow.