Ch. 1 The Dynamics of Business and Economics Flashcards
Budget Deficit
the condition in which a nation spends more than it takes in from taxes
Budget Surplus
the condition in which a nation spends less than it takes in from taxes
Business
individuals or organizations trying to earn a profit by providing goods and services that satisfy people’s needs
Capitalism or Free Enterprise
an economic system in which individuals own and operate the majority of businesses that provide goods and services
Communism
first described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources
Depression
a condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced
Economic Contraction
a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers
Economic Expansion
the situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment
Economic System
a description of how a particular society distributes its resources to produce goods and services
Economics
the study of how resources are distributed for the production of goods and services within a social system
Equilibrium Price
the price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time
Financial Resources
the funds used to acquire the natural and human resources needed to provide products; also called capital
Free Market System
pure capitalism, in which all economic decisions are made without government intervention
Gross Domestic Product (GDP)
the sum of all goods and services produced in a country during a year
Inflation
a condition characterized by a continuing rise in prices
Mixed Economics
economies made up of elements from more than one economic system
Monopolized Competition
the market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small
Monopoly
the market structure that exists when there is only one business providing a product in a given market
Oligopoly
An oligopoly is a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies. Like a monopoly but with a small amount of business instead of one big business
Open Economy
an economy in which economic activities occur between a country and the international community
Pure Competition
the market structure that exists when there are many small businesses selling one standardized product
Recession
a decline in production, employment, and income
Socialism
an economic system in which the government owns and operates basic industries but individuals own most businesses
Standard of Living
refers to the level of wealth and material comfort that people have available to them
