Chapter 1 Understanding Economic Systems and Business

Question 1

An organization that strives for a profit by providing goods and services desired by its customers is called a what?

Answer 1

business

Question 2

What are tangible items manufactured by businesses?

Answer 2

goods

Question 3

What are intangible offerings of businesses that can’t be held, touched, or stored called?

Answer 3

services

Question 4

A country’s output of goods and services that people can buy with the money they have is called the _______________________.

Answer 4

standard of living

Question 5

The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time is called _________________________.

Answer 5

quality of life

Question 6

The potential to lose time and money or otherwise not be able to accomplish an organization’s goals is called ____________.

Answer 6

risk

Question 7

What is the money a company receives by providing services or selling goods to customers?

Answer 7

revenue

Question 8

What do we call expenses incurred from creating and selling goods and services?

Answer 8

costs

Question 9

The money left over after all costs are paid is the ______________.

Answer 9

profit

Question 10

An organization that exists to achieve some goal other than the usual business goal of profit is a(n) _______________________.

Answer 10

not-for-profit organization

Question 11

The resources used to create goods and services are called ________________________.

Answer 11

factors of production

Question 12

What do you call the inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer?

Answer 12

capital

Question 13

___________ are people who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal.

Answer 13

entrepreneurs

Question 14

__________ is the combined talents and skills of the workforce.

Answer 14

knowledge

Question 15

Workers who create, distribute, and apply knowledge are called __________________.

Answer 15

knowledge workers

Question 16

The study of people’s vital statistics, such as their age, gender, race and ethnicity, and location is referred to as ______________.

Answer 16

demography

Question 17

What do we call the application of science and engineering skills and knowledge to solve production and organizational problems?

Answer 17

technology

Question 18

The amount of goods and services one worker can produce is called _____________.

Answer 18

productivity

Question 19

__________ is the combination of policies, laws, and choices made by a nation’s government to establish the systems that determine what goods and services are produced and how they are allocated.

Answer 19

economic system

Question 20

__________ is the study of how a society uses scarce resources to produce and distribute goods and services.

Answer 20

economics

Question 21

An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also known as the private enterprise system, is called ____________.

Answer 21

capitalism

Question 22

Which economic system is characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central government planning.

Answer 22

communism

Question 23

An economic system in which the basic industries are owned either by the government itself or by the private sector under strong government control is know as _________________.

Answer 23

socialism

Question 24

Economies that combine several economic systems; for example, an economy where the government owns certain industries but others are owned by the private sector, are called ____________________.

Answer 24

mixed economies

Question 25

The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products is referred to as ________________________.

Answer 25

macroeconomics

Question 26

The subarea of economics that focuses on individual parts of the economy, such as households or firms is referred to as _______________________.

Answer 26

microeconomics

Question 27

The movement (or flow) of inputs and outputs among households, businesses, and governments is called ____________. This is also a way of showing how the sectors of the economy interact.

Answer 27

circular flow

Question 28

An increase in a nation’s output of goods and services is called ______________.

Answer 28

economic growth

Question 29

The ___________________ is the total market value of all final goods and services produced within a nation’s borders each year.

Answer 29

gross domestic product (GDP)

Question 30

What do you call upward and downward changes in the level of economic activity?

Answer 30

business cycles

Question 31

A decline in GDP that lasts for at least two consecutive quarters is a _____________.

Answer 31

recession

Question 32

The condition when all people who want to work and can work have jobs is called ___________________.

Answer 32

full employment

Question 33

The __________________ is the percentage of the total labor force that is not working but is actively looking for work.

Answer 33

unemployment rate

Question 34

Short-term unemployment that is not related to the business cycle is what kind of unemployment?

Answer 34

frictional unemployment

Question 35

Unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry or region and is not related to the business cycle is called _________________ unemployment.

Answer 35

structural unemployment

Question 36

What term is defined by unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy?

Answer 36

cyclical unemployment

Question 37

Unemployment that occurs during specific seasons in certain industries is called _________________ unemployment.

Answer 37

seasonal unemployment

Question 38

What is the situation in which the average of all prices of goods and services is rising called?

Answer 38

inflation

Question 39

The value of what money can buy is ____________________.

Answer 39

purchasing power

Question 40

Inflation that occurs when the demand for goods and services is greater than the supply is called ________________ inflation.

Answer 40

demand-pull inflation

Question 41

Inflation that occurs when increases in production costs push up the prices of final goods and services is called _____________.

Answer 41

cost-push inflation

Question 42

What do we call the index of the prices of a “market basket” of goods and services purchased by typical urban consumers?

Answer 42

consumer price index (CPI)

Question 43

A _______________________ is a government’s programs for controlling the amount of money circulating in the economy and interest rates.

Answer 43

monetary policy

Question 44

A(n) __________________ is an index of the prices paid by producers and wholesalers for various commodities, such as raw materials, partially finished goods, and finished products.

Answer 44

producer price index (PPI)

Question 45

The central banking system of the United States is called the ___________________.

Answer 45

Federal Reserve System (the Fed)

Question 46

The use of monetary policy by the Fed to tighten the money supply by selling government securities or raising interest rates is the ______________.

Answer 46

contractionary policy

Question 47

What do we call the use of monetary policy by the Fed to increase, or loosen, the growth of the money supply?

Answer 47

expansionary policy

Question 48

The government’s use of taxation and spending to affect the economy is the ___________________.

Answer 48

fiscal policy

Question 49

The situation that occurs when government spending replaces spending by the private sector is called ______________.

Answer 49

crowding out

Question 50

_______________ is the condition that occurs when the federal government spends more for programs than it collects in taxes.

Answer 50

federal budget deficit

Question 51

The ____________________ is the accumulated total of all of the federal government’s annual budget deficits.

Answer 51

national debt

Question 52

Government bonds issued in relatively small denominations are ______________.

Answer 52

savings bonds

Question 53

________ is the quantity of a good or service that people are willing to buy at various prices.

Answer 53

demand

Question 54

A _____________ is a graph showing the quantity of a good or service that people are willing to buy at various prices.

Answer 54

demand curve

Question 55

The quantity of a good or service that businesses will make available at various prices is the ________________.

Answer 55

supply

Question 56

A __________________ is a graph showing the quantity of a good or service that businesses will make available at various prices.

Answer 56

supply curve

Question 57

The point at which quantity demanded equals quantity supplied is called ___________.

Answer 57

equilibrium

Question 58

The ____________________ is the number of suppliers in a market.

Answer 58

market structure

Question 59

A market structure in which a large number of small firms sell similar products, buyers and sellers have good information, and businesses can be easily opened or closed is called a _____________________________.

Answer 59

perfect (pure) competition

Question 60

A(n) _______________ is market structure in which a single firm accounts for all industry sales of a particular good or service and in which there are barriers to entry.

Answer 60

pure monopoly

Question 61

Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm are called?

Answer 61

barriers to entry

Question 62

A market structure in which many firms offer products that are close substitutes and in which entry is relatively easy is called ___________________________________-.

Answer 62

monopolistic competition

Question 63

A(n) __________________ is a market structure in which a few firms produce most or all of the output and in which large capital requirements or other factors limit the number of firms.

Answer 63

oligopoly

Question 64

__________________________ is the practice of building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships.

Answer 64

relationship management

Question 65

A _______________ is a cooperative agreement between business firms; sometimes called a strategic partnership.

Answer 65

strategic alliance