SWUFE-Understanding Business 9th Edition-Chapter 2 – Flashcards
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Economics
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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
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Macroeconomics
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The part of economics study that looks at the operation of a nation's economy as a whole
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Microeconomics
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The part of economics study that looks at the behavior of people and organizations in particular markets
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Resource Development
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The study of how to increase resources and to create the conditions that will make better use of those resources.
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Invisible Hand Theory
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A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
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Supply
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The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
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Demand
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The quantity of products that people are willing to buy at different prices at a specific time
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Market Price
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The price determined by supply and demand
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Perfect Competition
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The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product
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Monopolistic Competition
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The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
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Oligopoly
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A degree of competition in which just a few sellers dominate the market
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Monopoly
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A degree of competition in which only one seller controls the total supply of a product or service, and sets the price
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Free-Market Economies
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Economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
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Command Economies
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Economic system in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
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Mixed Economies
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Economic systems in which some allocation of resources is made by the market and some by the government
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Gross Domestic Product (GDP)
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The total value of final goods and services produced in a country in a given year
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Unemployment Rate
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Number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
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Inflation
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A general rise in the prices of goods and services over time
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Disinflation
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A situation in which price increases are slowing (the inflation rate is declining)
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Deflation
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A situation in which prices are declining
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Stagflation
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A situation when the economy is slowing but prices are going up anyhow
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Consumer Price Index (CPI)
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Monthly statistics that measure the pace of inflation or deflation
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Producer Price Index (PPI)
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An index that measures prices at the wholesale level
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Business Cycles
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The periodic rises and falls that occur in economies over time
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Recession
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Two or more consecutive quarters of decline in the GDP
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Depression
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A severe recession, usually accompanied by deflation
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Fiscal Policy
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The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending
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National Debt
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The sum of government deficits over time
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Keynesian Economic Theory
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The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
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Monetary Policy
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The management of the money supply and interest rates by the Federal Reserve Bank
