Intro to Business Chapter 2 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Economy
answer
A financial and social system of how resources flow through society, from production to distribution, to consumption.
question
Economics
answer
The study of the choices that people, compaines, and governments make in allocating society's resources
question
Macroeconomics
answer
The study of a countrys overall economic issues, such as the employment rate, the gross domestic products and taxation policies
question
Microecomonics
answer
The study of smaller economic units such as individual consumers, families and individual businesses.
question
Financial policy
answer
goverment efforts to influence the economy through taxation and spending.
question
Budget Surplus
answer
Overage that occurs when revenue is higher than expenses over a given period of time.
question
Budget deficit
answer
Shortfall that occurs when expenses are higher than revenue over a given period of time.
question
Federal debt
answer
The sume of all the money that the Federal Goverment has borrowed over the years and not yet repaid.
question
Monetary policy
answer
Federal Reserve decisions that shpe the economy by influencing interest rates and the supply of money.
question
Money supply
answer
The total amount of money within the overall economy.
question
M1 Money supply
answer
Includes all currency pluch checking accounts and traveler's checks.
question
M2 Money Supply
answer
Includes all of M1 money supply plus monst savings accounts, money market accounts, and certificates of deposit.
question
Open Market Operations.
answer
The Federal Reserve function of buying and selling government securities which include treasury bonds, notes and bills.
question
discount rate
answer
The rate of interest that the Federal Reserve charges when it loans funds to banks.
question
Federal Deposit Corporation (FDIC)
answer
A federal agency that insures deposits in banks and thirt institutions for up to $100,000 per customer, per bank.
question
Reserve requirment
answer
A rule set by the Fed, which specifies the minimum aomount of reserves (or funds) a bank must hold, expressed as a percentage of the bank's deposits.
question
economic system
answer
A structure for allocating limited resources.
question
capitalism
answer
An ecomonic system - also known as the private enterpise or free market system based on private ownership, econmomic freedom, and fair competition.
question
Pure Competition
answer
A market structure with many competitors selling virtually identical products. Barriers to entry are quite low.
question
Monompolistic competition
answer
A market structure with many competitors selling differentiated products. Barriers to entry are low.
question
Oligopoly
answer
A markt structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are typically high.
question
Monopoly
answer
A market structure with one producer completely dominating the industry, leaving no room for any significatnt competitors. Barirers to entry tend to be virtually insurmountable.
question
natural monopoly
answer
A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are goverment sanctioned and regulated.
question
Supply
answer
The quantity of products that producers are willing to offer for sale at different market prices.
question
Supply Curve
answer
The graphed relationship between price and quantity from a supplier standpoint.
question
demand
answer
The quantitiy of products that consumers are willing to buy at different market prices.
question
demand curve
answer
The graphed relationship between price and quantity from a customer demand standpoint.
question
equilibrium price
answer
The price associated with the point at which the quantity demanded of a product equals the quantity supplied.
question
socialism
answer
An economic system based on the principle that the goverment should own and operate key enterprises that directly affect public welfare.
question
Communism
answer
An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central goverment.
question
Mixed economies
answer
Economies that embody elements of both planned and market-based economic systems.
question
privatization
answer
The process fo converting govmerment owned businesses to private ownership.
question
Gross Domestic Product (GDP)
answer
The total value of all final goods and servides produced within a nation's physical boundaries over a given period of time.
question
Unemployment rate
answer
Teh percentage of people in the labor force over age 15 wo do not have jobs and are actively seeking employment.
question
Business cycle
answer
The periodic contraction and expansion that occur over time in virtually every economy.
question
Contraction
answer
a period of ecomonic downturn, marked by rising unemployment and falling business production
question
Recession
answer
An economic downturn marked by a decrease in the GDP for two consecutive quarters.
question
Depression
answer
An especially deep and long lasting recession.
question
recovery
answer
A period of rising economic growth and employment.
question
expansion
answer
a period of robust ecomonic growth and high employment.
question
inflation
answer
a period of rising average prices accross the economy.
question
hyperinflation
answer
an average montly infalation rate of more than 50%
question
disinflation
answer
A period of slowing average price increases across the economy.
question
Deflation
answer
a period of falling average prices accross the economy.
question
Consumer price index (CPI)
answer
A measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.
question
Producer price Index (PPI)
answer
A measure of inflation that evaluates the change over time in the weighted-average wholesale prices.
question
Productivitiy
answer
The basic relationship between the production of goods and services (output) and the resources needed to produce them (input) calculated via the following equation: output/input = productivity
