Chapter 1 Understanding Economic Systems and Business Flashcards
Key terms used in Chapter 1 of Openstax Introduction to Business
An organization that strives for a profit by providing goods and services desired by its customers is called a what?
business
What are tangible items manufactured by businesses?
goods
What are intangible offerings of businesses that can’t be held, touched, or stored called?
services
A country’s output of goods and services that people can buy with the money they have is called the _______________________.
standard of living
The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time is called _________________________.
quality of life
The potential to lose time and money or otherwise not be able to accomplish an organization’s goals is called ____________.
risk
What is the money a company receives by providing services or selling goods to customers?
revenue
What do we call expenses incurred from creating and selling goods and services?
costs
The money left over after all costs are paid is the ______________.
profit
An organization that exists to achieve some goal other than the usual business goal of profit is a(n) _______________________.
not-for-profit organization
The resources used to create goods and services are called ________________________.
factors of production
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?
capital
___________ 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.
entrepreneurs
__________ is the combined talents and skills of the workforce.
knowledge
Workers who create, distribute, and apply knowledge are called __________________.
knowledge workers
The study of people’s vital statistics, such as their age, gender, race and ethnicity, and location is referred to as ______________.
demography
What do we call the application of science and engineering skills and knowledge to solve production and organizational problems?
technology
The amount of goods and services one worker can produce is called _____________.
productivity
__________ 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.
economic system
__________ is the study of how a society uses scarce resources to produce and distribute goods and services.
economics
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 ____________.
capitalism
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.
communism
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 _________________.
socialism
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 ____________________.
mixed economies
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 ________________________.
macroeconomics
The subarea of economics that focuses on individual parts of the economy, such as households or firms is referred to as _______________________.
microeconomics
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.
circular flow
An increase in a nation’s output of goods and services is called ______________.
economic growth
The ___________________ is the total market value of all final goods and services produced within a nation’s borders each year.
gross domestic product (GDP)
What do you call upward and downward changes in the level of economic activity?
business cycles
A decline in GDP that lasts for at least two consecutive quarters is a _____________.
recession
The condition when all people who want to work and can work have jobs is called ___________________.
full employment
The __________________ is the percentage of the total labor force that is not working but is actively looking for work.
unemployment rate
Short-term unemployment that is not related to the business cycle is what kind of unemployment?
frictional unemployment
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.
structural unemployment
What term is defined by unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy?
cyclical unemployment
Unemployment that occurs during specific seasons in certain industries is called _________________ unemployment.
seasonal unemployment
What is the situation in which the average of all prices of goods and services is rising called?
inflation
The value of what money can buy is ____________________.
purchasing power
Inflation that occurs when the demand for goods and services is greater than the supply is called ________________ inflation.
demand-pull inflation
Inflation that occurs when increases in production costs push up the prices of final goods and services is called _____________.
cost-push inflation
What do we call the index of the prices of a “market basket” of goods and services purchased by typical urban consumers?
consumer price index (CPI)
A _______________________ is a government’s programs for controlling the amount of money circulating in the economy and interest rates.
monetary policy
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.
producer price index (PPI)
The central banking system of the United States is called the ___________________.
Federal Reserve System (the Fed)
The use of monetary policy by the Fed to tighten the money supply by selling government securities or raising interest rates is the ______________.
contractionary policy
What do we call the use of monetary policy by the Fed to increase, or loosen, the growth of the money supply?
expansionary policy
The government’s use of taxation and spending to affect the economy is the ___________________.
fiscal policy
The situation that occurs when government spending replaces spending by the private sector is called ______________.
crowding out
_______________ is the condition that occurs when the federal government spends more for programs than it collects in taxes.
federal budget deficit
The ____________________ is the accumulated total of all of the federal government’s annual budget deficits.
national debt
Government bonds issued in relatively small denominations are ______________.
savings bonds
________ is the quantity of a good or service that people are willing to buy at various prices.
demand
A _____________ is a graph showing the quantity of a good or service that people are willing to buy at various prices.
demand curve
The quantity of a good or service that businesses will make available at various prices is the ________________.
supply
A __________________ is a graph showing the quantity of a good or service that businesses will make available at various prices.
supply curve
The point at which quantity demanded equals quantity supplied is called ___________.
equilibrium
The ____________________ is the number of suppliers in a market.
market structure
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 _____________________________.
perfect (pure) competition
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.
pure monopoly
Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm are called?
barriers to entry
A market structure in which many firms offer products that are close substitutes and in which entry is relatively easy is called ___________________________________-.
monopolistic competition
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.
oligopoly
__________________________ is the practice of building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships.
relationship management
A _______________ is a cooperative agreement between business firms; sometimes called a strategic partnership.
strategic alliance
