1142 Definitions Flashcards
production of goods and services
economic activity
extended periods that indicate long-range economic direction
trends
short-term fluctuations of output around along-term trend
business cycles
average annual growth rate of U.S. economy
3-3.5 percent
target rate of unemployment
5 to 7 percent
income based on producing for others
wages
income based on selling one’s own production
revenue
lowest sustainable rate of unemployment possible under existing conditions
target rate
high point of a business cycle
peak
downturn lasting more than two quarters
recession
unemployment of more than 12% for more than a year
depression
gauges of the health of an entire economy
representative indicators
indications of current phase of the economy
coincidental indicators
indications of what is likely to occur in 12-15 months
leading indicators
Pollution and
Depletion of natural resources
detrimental results of growth
Investment
Institutional incentives
Resources
Technological development
Ingredients necessary for economic growth
trough and peak = low/high
recession and boom = extremes
straight line =
average growth trend
the curve on the business cycle graph =
actual growth rate
the result of the freedom within a free-enterprise company
Frictional unemployment
results from economic changes during a temporary period of time
Seasonal unemployment
the result of changes in the economy itself
Structural unemployment
a result of fluctuations in economic activity
cyclical unemployment
occurs when an employee leaves a job to seek another
frictional unemployment
is of most concern to economists and government officials
cyclical unemployment
is a reality because of the shift to hourly wages
cyclical unemployment
bottom of a recession or depression
trough
business owned and managed by a single individual
sole proprietorship
business owned by two or more individuals
partnership
certificate of ownership in a corporation
share of stock
company with a market capitalization of more than $1 billion
large cap company
issuing and selling of stock by a company
primary distribution
subsequent trading of a corporation’s stock
secondary market transaction
association of security brokers and dealers
stock exchange
computer network that transmits and updates price quotations
NASDAQ
act of combining two firms
merger
merger of firms in very different industries
conglomerate merger
merger between companies in the same industry
horizontal merger
merger between firms ahead of or behind each other in the production process
vertical merger
act of selling part of a corporation recently acquired
deacquisition
type of contract that attempts to correlate a firm’s incentives with its managers’ incentives
incentive-compatible
unlimited liability limited life heavy responsibility on owner lowest management cost best able to maximize profits because of personal involvement of owner(s)
sole proprietorship
partnership
limited liability perpetual life requires a state charter highest management cost best able to raise capital issues and sells shares of stock ownership easily transferred generates the most revenue ownership vested in stockholders
corporation
hiring workers
controlling quality
communicating with workers and top management
meeting objectives
responsibilities of managers
division and department managers
is responsible for making operational decisions
middle management
the board of directors and top executives
is responsible for making decisions that can affect or alter the course of the corporation
top management
how much a person is willing to change the number of hours he works when his wage increases or decreases
incentive effect
an action in which a union refuses to purchase a certain product in order to strengthen another union’s bargaining position.
secondary boycott
the purchase of stocks or bonds for individuals
Saving
what a firm spends on capital goods
investment
allows firms to write off investment costs more rapidly
accelerated depreciation
