Chapter 1: Exploring the World of Business & Economics – Flashcards
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the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it
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free enterprise
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differences among people in a workforce owing to race, ethnicity, and gender
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cultural (or workplace) diversity
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the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs
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business
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what remains after all business expenses have been deducted from sales revenue
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profit
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all the different people or groups of people who affected by an organization's policies, decisions, and activities
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stakeholders
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the way in which people deal with the creation and distribution of wealth
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economics
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the study of the decisions made by individuals and businesses
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microeconomics
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the study of the national economy and the global economy
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macroeconomics
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the way in which people deal with the creation and distribution of wealth
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economy
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resources used to produce goods and services
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factors of production
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a person who risks time, effort and money to start and operate a business
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entrepreneur
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an economic system in which individuals own and operate the majority of businesses and provide goods and services
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capitalism
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a term created Adam Smith to describe how an individual's personal gain benefits others and a nation's economy
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invisible hand
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an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and produced
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market economy
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an economy that exhibits elements of both capitalism and socialism
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mixed economy
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a product purchased to satisfy personal and family needs
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consumer products
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an economic system in which the government decides what goods and services will be produced and how they will be controlled
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command economy
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the average level of output per worker per hour
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productivity
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the total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period
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gross domestic product (GDP)
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a general rise in prices
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inflation
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a general decline in prices
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deflation
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the percentage of a nation's labor force unemployed at any time
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unemployment rate
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a monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area
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consumer price index (CPI)
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an index that measures prices that produces receive for their finished goods
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producer price index (PPI)
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the recurrence of periods of growth and recession in a nation's activity; consists of four stages: peak, recession, trough, and recovery
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business cycle
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two or more consecutive three month periods of decline in a country's GDP
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recession
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a severe recession that lasts longer and has a larger decline in business activity when compared to a recession
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depression
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Federal Reserve's decisions that determine the size of the supply of money in the nation and interest rates
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monetary policies
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government influence on the amount of savings and expenditures by altering tax structure and government spending
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fiscal policy
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a shortfall created when the government spends more in the fiscal year than it receives
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federal deficit
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the total of all federal deficits
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national debt
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rivalry among businesses for sales; four types: perfect, monopolisitic, oligopoly, and monopoly
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competition
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the market situation when there are many buyers and sellers but no single buyer or seller as powerful enough to affect the price of the product
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pure (or perfect) competition
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an item that facilitates production and operation but does not become a part of the finished product
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supply
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the quantity of a product that buyers are willing to purchase at various prices
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demand
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the price at which the quantity demanded is exactly equal to the quantity supplied
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market price
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a market situation in which there a many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors
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monopolistic competition
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the process of developing and promoting differences between products
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product differentiation
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a market in which there are few sellers
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oligopoly
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a market with only one seller
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monopoly
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a loose subjective measure of how well off an individual of society is
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standard of living
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a system of exchange of goods and services without money
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barter
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a method of manufacturing where the raw materials are distributed to homes for families to turn them into finished products. After which the products are offered for sale by the entrepreneur
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domestic system
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a system of manufacturing where the production and assembly occurs in one place
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factory system
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the separation of the manufacturing process into distinct tasks and the tasks are assigned to various individuals
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specialization
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an economy where more effort is devoted to the production of services over the production of goods
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service economy
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the online interaction that allows people and businesses to communicate and share
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social media
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creating and maintaining the conditions under which humans and nature can exist in productive harmony
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susainability
