Understanding Economics And How It Affects Business Answers – 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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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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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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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
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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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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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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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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 that profits can be more evenly distributed among the people.
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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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communism
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An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.
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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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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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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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The 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 increase 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 period 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.
