SWUFE-Understanding Business 9th Edition-Chapter 2

Flashcard maker : Lily Taylor
Economics
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
Macroeconomics
The part of economics study that looks at the operation of a nation’s economy as a whole
Microeconomics
The part of economics study that looks at the behavior of people and organizations in particular markets
Resource Development
The study of how to increase resources and to create the conditions that will make better use of those resources.
Invisible Hand Theory
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
Supply
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
Demand
The quantity of products that people are willing to buy at different prices at a specific time
Market Price
The price determined by supply and demand
Perfect Competition
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
Monopolistic Competition
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
Oligopoly
A degree of competition in which just a few sellers dominate the market
Monopoly
A degree of competition in which only one seller controls the total supply of a product or service, and sets the price
Free-Market Economies
Economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
Command Economies
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
Mixed Economies
Economic systems in which some allocation of resources is made by the market and some by the government
Gross Domestic Product (GDP)
The total value of final goods and services produced in a country in a given year
Unemployment Rate
Number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
Inflation
A general rise in the prices of goods and services over time
Disinflation
A situation in which price increases are slowing (the inflation rate is declining)
Deflation
A situation in which prices are declining
Stagflation
A situation when the economy is slowing but prices are going up anyhow
Consumer Price Index (CPI)
Monthly statistics that measure the pace of inflation or deflation
Producer Price Index (PPI)
An index that measures prices at the wholesale level
Business Cycles
The periodic rises and falls that occur in economies over time
Recession
Two or more consecutive quarters of decline in the GDP
Depression
A severe recession, usually accompanied by deflation
Fiscal Policy
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending
National Debt
The sum of government deficits over time
Keynesian Economic Theory
The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
Monetary Policy
The management of the money supply and interest rates by the Federal Reserve Bank

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