Business Now Chapter 2

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Brain Drain
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The loss of the best and brightest people to other countries.
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Business cycle
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A common pattern in which there is a period of rapid economic growth (recovery and prosperity) when supply and demand stimulate each other, alternating with a period of decline (contraction or recession) with diminishing demand and supply.
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Capitalism
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An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
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Command Economies
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Economic systems 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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Communism
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An economic and political system in which the state (the government) makes all economic decisions and owns almost all the major factors of production, including housing for its people.
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Consumer Price Index (CPI)
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A set of monthly statistics that measures the pace of inflation or deflation.
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Deflation
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A general decline in the prices of goods and services over time.
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Demand
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The quantity of products people are willing and able to buy at different prices at a specific time.
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Depression
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A severe recession
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Deregulation
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The removal of government control and strict oversight in a market that thereby opens the market for other to enter.
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Economics
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The study of how individuals and society choose to use scarce resources to produce goods and services and distribute them for consumption.
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Equilibrium Point
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The point at which the amount of goods sought by buyers is equal to the amount of goods produced by suppliers.
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Free Market
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A system in which decisions about what to produce and in what quantities are made by the market.
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Free-Market Economies
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Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows.
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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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Gross National Product (GNP)
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The value of goods and services produced by a country’s factors of production, regardless of where these factors are based.
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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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Interest Rates
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A rate charged for using money.
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Invisible Hand
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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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Macroeconomics
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The study of the operation of a nation’s economy as a whole.
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Microeconomics
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The study of the behavior of people and organizations in particular markets.
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Mixed Economics
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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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Monetary Policy
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The management of the money supply and interest rates by the Federal Reserve Bank.
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Monopolistic Competition
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A market condition in which a large number of business produce products that are very similar but are perceived by buyers as different.
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Monopoly
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A form of competition in which only one business controls the total supply of a product and its price.
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National Debt
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The sum of government deficits over time.
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National Deficit
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The money the federal government spends over and above its revenue for a specific period of time.
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Oligopoly
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A form of competition in which just a few businesses dominate a market.
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Opportunity Cost
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Refers to what you give up (your next best choice) in order to do or get something else (your chosen decision).
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Perfect Competition
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A market condition in which there are many businesses and no one business is large enough to dictate the price of a product.
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Producer Price Index (PPI)
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A set of monthly statistics that measures prices at the wholesale level.
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Product Differentiation
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An attempt to make buyers think similar products are different in some way.
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Recession
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A period during which the GDP of a nation declines for two or more quarters.
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Recovery
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A period following a recession during which an economy stabilizes and begins to grow again.
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Resource Development
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The study of how to increase resources and create the conditions that will make better use of those resources.
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Socialism
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An economic system based on the premise that some if not most, basic businesses should be owned by the government so profits can be evenly distributed among all people.
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Stagflation
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A situation where the economy is slowing but prices are rising.
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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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Unemployment Rate
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The number of civilians 16 years of age and older who are unemployed and have tried to find a job within the prior four weeks.
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Unemployment Rate
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The number of civilians 16 years of age and older who are unemployed and have tried to find a job within the prior four weeks.
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Unemployment Rate
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The number of civilians 16 years of age and older who are unemployed and have tried to find a job within the prior four weeks.

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