Chapter 1: Understanding Business

Question 1

Any activity that seeks to provide goods and services to others while operating at a profit.

Answer 1

Business

Question 2

Business

Answer 2

Any activity that seeks to provide goods and services to others while operating at a profit.

Question 3

Tangible products such as computers, food, clothing, cars, and appliances.

Answer 3

Goods

Question 4

Goods

Answer 4

Tangible products such as computers, food, clothing, cars, and appliances.

Question 5

Intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.

Answer 5

Services

Question 6

Services

Answer 6

Intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.

Question 7

The total amount of money a business takes in during a given period by selling goods and services.

Answer 7

Revenue

Question 8

Revenue

Answer 8

The total amount of money a business takes in during a given period by selling goods and services.

Question 9

The amount of money a business earns above and beyond what it spends for salaries and other expenses.

Answer 9

Profit

Question 10

Profit

Answer 10

The amount of money a business earns above and beyond what it spends for salaries and other expenses.

Question 11

The amount of goods and services people can buy with the money they have.

Answer 11

Standard of Living

Question 12

Standard of Living

Answer 12

The amount of goods and services people can buy with the money they have.

Question 13

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

Answer 13

Stakeholders

Question 14

Stakeholders

Answer 14

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

Question 15

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.

Answer 15

Economics

Question 16

The study of how to increase resources and to create the conditions that will make better use of those resources.

Answer 16

Resource Development

Question 17

The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.

Answer 17

Factors of Production

Question 18

Factors of production

Answer 18

The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.

Question 19

Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
Ex: socialism and communism

Answer 19

Command Economies

Question 20

Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows. Ex: capitalism

Answer 20

Free-market economies

Question 21

Economic systems in which some allocation of resources is made by the market and some by the government.

Answer 21

Mixed economies

Question 22

An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.

Answer 22

Socialism

Question 23

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.

Answer 23

Communism

Question 24

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.

Answer 24

Capitalism

Question 25

4 basic rights people have under free-market capitalism

Answer 25

1. The right to own private property
2. The right to own a business and keep all that bussines’s profits (after taxes)
3. The right to freedom of competition
4. The right to freedome of choice

Question 26

The price determined by supply and demand.

Answer 26

Market price

Question 27

A degree of competition in which just a few sellers dominate the market.

Answer 27

Oligopoly

Question 28

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.

Answer 28

Monopolistic Competition

Question 29

The total value of final goods and services produced in a country in a given year.

Answer 29

Gross domestic product

Question 30

A situation in which price increases are slowing (the inflation rate is declining).

Answer 30

Disinflation

Question 31

A situation in which prices are declining.

Answer 31

Deflation

Question 32

A situation when the economy is slowing but prices are going up anyhow.

Answer 32

Stagflation

Question 33

Monthly statistics that measure the pace of inflation or deflation.

Answer 33

Consumer Price Index (CPI)

Question 34

CPI minus food and energy costs.

Answer 34

Core Inflation

Question 35

An index that measures the change in prices at the wholesale level.

Answer 35

Producer Price Index (PPI)

Question 36

What are the 3 economic indicators?

Answer 36

1. GDP
2. Unemploymeny rate
3. Price Indexes

Question 37

Two or more consecutive quarters of decline in the GDP.

Answer 37

Recession

Question 38

A severe recession, usually accompanied by deflation.

Answer 38

Depression

Question 39

The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.

Answer 39

Fiscal policy

Question 40

The management of the money supply and interest rates by the Federal Reserve Bank.

Answer 40

Monetary policy