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chapter 1 business > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Economy

A

the flow or resources in society. Production distribution to consumption.

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2
Q

Economics

A

How money is distributed by people, governments, and companies.

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3
Q

Macroeconomics

A

the study of employment rate taxation policies, and measure of economic activity.

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4
Q

Microeconomics

A

the study of smaller and more personal businesses, families, and individual consumption.

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5
Q

Fiscal policy

A

it uses taxes and spending to influence the economy.

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6
Q

Budget surplus

A

is when how much you make is higher thin expenses.

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7
Q

Budget deficit

A

expenses are higher thin what you make.

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8
Q

Federal debt

A

money the government has borrowed and hasn’t paid back.

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9
Q

Debt-ceiling

A
  • is the maximum amount congress will let the government borrow.
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10
Q

Fiscal cliff

A

budget cuts and an increase in taxes

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11
Q

Money

A

A measure of value.

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12
Q

Federal Reserve (FED)

A

The federal reserve is a seven-member board of governors who have a 14- year term. They are responsible for monetary policy and provide services for commercial banks. One person is selected by the president as the chair. Its free from political stress since members are picked by a new president.

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13
Q

Monetary policy

A

controlling interest rates added to loans and supply of money shaping our economy. Its managed by the federal reserve.

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14
Q

Commercial banks

A

privately owned financial institutions.

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15
Q

Money supply

A

the total amount of money an economy has.

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16
Q

M1

A

bills, coins, checks, and checking accounts.

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17
Q

M2

A

all of M1 plus savings, market accounts, and certificate of deposit.

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18
Q

Open market operations

A

are the IOU the government issue when spending during a deficit. They normally sell, securities like treasury bonds, notes, and bills.

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19
Q

Discount rate

A
  • interest rate the fed charges commercial banks when they pull out a loan. When its lowered it gives them the ability to give out more loans to customers.
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20
Q

Federal deposit insurance corporation

A

a agency that insures each depositor per bank $250,000.

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21
Q

Reserve requirements

A

the minimum amount a bank must hold. In the event a depositor pulls out all their money they are protected. If FED increases the amount a bank must hold banks may not want to give loans and may increase interest rate.

22
Q

Merger

A

when two businesses come together. Becoming one legal entity.

23
Q

Economic system

A

a structure for issuing limited resources and are never perfect.

24
Q

Capitalism

A

an economic system based on economic freedom and fair competition. Not everyone gets this.

25
Q

Rights of capitalism

A
  1. The right to own a business and keep what’s left after paying taxes.
  2. The right to private property.
  3. Free choice that also feeds competition.
  4. Fair competition levels the playing field and is regulated and watched by the government to make sure businesses are following the rules.
26
Q

Four degrees of competition

A
  1. pure competition competitors selling almost identical products or services.
  2. Monopolistic competition is when a product is the same but transformed and can have many different prices and a little easier to start.
  3. Oligopoly sell similar or different types of products and is difficult to start.
  4. Monopoly is when a business dominates the industry and is extremely hard to start and compete with. It is frowned upon because it’s not fair competition.
27
Q

Natural monopoly

A

some monopolies are needed because having multiple just would make since or would cause problems. Like multiple pipelines. Allowing some monopolies also encourages innovation and that’s always good.

28
Q

Supply

A

the quantity of product that I’m willing to sell.

29
Q

Supply curve

A

a graph showing the relationship between price and quantity.

30
Q

Demand curve

A

a graph showing the relationship between price and demand.

31
Q

Socialism

A

is the economic system that the government owns and operates businesses that effect everyone like utilities. The taxes are used to improve society.

32
Q

Communism

A

an economic and political system that owns all enterprises.

33
Q

Mixed economies

A

planned and market-based economic systems. Our government is market oriented.

34
Q

Privatization

A

the conversion of government owned business to private.

35
Q

Gross domestic product (GDP)

A

the total value for all goods and services produced in our nation. Inflation is not included you have to figure that out yourself. The GDP shows me the health of my economy. Even if my business is in a different state the GDP needs to be calculated. This GDP is also used to compare the growth to other nations. Production is included in the GDP as well. Illegal activities and things that could increase taxes are ignored.

36
Q

Employment level

A

the unemployment rate is the main way to check this. Its everyone between the ages 16 and up who are actively looking for a job.

37
Q

Business cycle

A

its when business contracts and expands. No cycle is the same. Good bets make fortunes bad one lose out.

38
Q

Contraction

A

rising unemployment and a cut back on production. If GDP last two quarters it’s a recession. Luxury items are shelved and basic products are sold.

39
Q

Depression

A

is a long lasting recession

40
Q

Recovery

A

employment rate and production increases. Consumers start to spend more.

41
Q

Expansion

A

high employment rate and production. Innovation increases and people spend more. This results in more jobs.

42
Q

Inflation

A

prices rise. A low level of inflation is not always bad people can still have money.

43
Q

Hyperinflation

A

when prices increase more than 50% in a month.

44
Q

Disinflation

A

when prices slowly increase

45
Q

Delfation

A

Deflation- when prices fall. People will not spend money at this time.

46
Q

Consumer price index (CPI)

A

measures the prices of good and services over time plus how many goods and services and consumer purchases a month. Not everything counts though because not everyone may be going through what your going through so it wont be added to the CPI like textbooks.

47
Q

Producer price index (PPI)

A

a measure of the changes in prices and good.

48
Q

Productivity

A

it’s the relationship between goods and services and what was put in to produce them. The amount of good and services divided by time spent equals productivity. What you want is to produce a lot in little time.

49
Q

Regulatory reform

A

improvements to government regulations.

50
Q

BRIC

A

Brazil, Russia, India, China

chapter 1 business (2 decks)

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