Chapter 1

Question 1

o Networks: what’s the electronic network for making business connections?

Answer 1

Linked in and social media

Question 2

Cultural or workplace diversity

Answer 2

Race, ethnicity, sex, age

Question 3

Stakeholders

Answer 3

Anyone with a vested interest in the success of the business/organization:

• stakeholders
• employees
• customers
• government
• community
• creditors

Question 4

Accounting is the language of business!

Answer 4

:)

Question 5

What is economics the study of?

Answer 5

Economics is the study of how “wealth”, which I like to relabel as “scarce resources”, are
“created” and “distributed”

Question 6

Types of economic systems?

Answer 6

Capitalism:
- run by private corporations. An economic system in which individuals own and operate the majority of businesses that.
- a term created by
Adam Smith to describe how an individual’s personal gain benefits others and a nation’s economy.

Socialism:

• government run
  ie) France, Sweden, India.

Communism:

• More strictly controlled kind of socialism.
  ie) Cuba, North Korea

Mixed economy:
- mixed economy an economy
that exhibits elements of both
capitalism and socialism

Question 7

Microeconomics?

Answer 7

• How individuals and businesses make economic decisions.

Question 8

Macroeconomics?

Answer 8

• How units make economic decisions. Includes, regional, national and global economies.

Question 9

GDP?

Answer 9

Gross domestic product:
is the total dollar value of all goods and services produced by all people within the boundaries
of a country during a one-year period.
- Shifted from products to include services too.
- to annualize, take a quarter and times by 4.

Question 10

Unemployment rate?

Answer 10

The unemployment rate is the percentage of a nation’s labor force unemployed at any time.

Question 11

Labour participation rate?

Answer 11

You calculate the labor force participation rate by dividing the number of people actively participating in the labor force by the total number of people eligible to participate in the labor force.

Question 12

CPI?

Answer 12

Consumer Price Index:
The consumer price index (CPI) is a monthly index that measures the changes
in prices of a fixed basket of goods purchased by a typical consumer in an urban
area. Goods listed in the CPI include food and beverages, transportation, housing,
clothing, medical care, recreation, education, communication, and other goods and services. Economists often use the CPI to determine the effect of inflation on not only
the nation’s economy but also individual consumers.

Question 13

PPI?

Answer 13

Producer Price Index:
measures prices that producers
receive for their finished goods. Because changes in the PPI reflect price increases or decreases at the wholesale level, the PPI is an accurate predictor of both changes in the CPI and prices that consumers will pay for many everyday necessities.

Question 14

What is the business cycle?

Answer 14

The fluctuations faced by the nation’s economy. Peak, recession, trough, recovery (AKA expansion).
- a recession is defines as two or more consecutive
three-month periods of decline in a country’s GDP.

Question 15

What are monetary policies?

Answer 15

Monetary policies are the Federal Reserve’s decisions
that determine the size of the supply of money in the nation and the level of interest
rates.

Question 16

What are fiscal policies?

Answer 16

Fiscal policy is set by legislative law making bodies like congress. It deals with setting tax policies and then how to spend that money (government expenditures).

Question 17

federal deficit vs national debt?

Answer 17

federal deficit a shortfall created when the federal government spends
more in a fiscal year than it receives. In comparison, the national debt is the total of all federal deficits.

Question 18

Types of competition?

Answer 18

Perfect competition:
- is the market situation in which there are many buyers and sellers of a product, and no single buyer
or seller is powerful enough to affect the price of that product.
ie) corn, wheat, peanuts.

Monopolistic:
- Monopolistic competition is a market situation in which there are many buyers along with a relatively large number of sellers. The various products available in a monopolistically competitive market are very similar in nature, and they are all intended to satisfy the same need. However, each seller attempts to make its
product different.
ie) clothing, shoes.

Oligopoly?
- An oligopoly is a market (or industry) situation in which there are few sellers.
Generally, these sellers are quite large, and sizable investments are required to enter into their market.
ie) oligopolies are airline, automobile, airline, car rental, cereal, and farm implement industries.

Monopoly?
- A monopoly is a market (or industry) with only one seller, and there are barriers to
keep other firms from entering the industry. In a monopoly, there is no close substitute for the product or service.
ie) public utilitie, software protected by copyright.

Question 19

Supply and demand curve?

Answer 19

• As demand curve goes down, supply curve goes up.
• $ on y axis
• Quanitity of etc on x axis.
• Market price (equilibrium is where curves meet).

Question 20

What is the process called that allows “retained earnings” to link the income statement to the balance
sheet?

Answer 20

Process is called posting closing entries.