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Management > chapter 2 > Flashcards

chapter 2 Flashcards

1
Q

define economics

A

study of how society uses its scarce resources to produce and distribute goods dns services

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2
Q

What are the factors of production

A
  • natural resources
  • capital: factories, tools, money, machines
  • knowledge: experience/wisdom of an organization
  • human resources: people who work for an organization and talents they bring
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3
Q

define scarcity

A

productive resource with finite supply
– creates resource competition–> forcing trade offs

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4
Q

define economic indicators

A

statistics measuring the performance of the economy

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5
Q

types of economic indicators

A
  1. leading: economic changes happening in the future
  2. lagging: economic changes in the past
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6
Q

key economic indicators

A
  • price index
  • housing starts
  • durable-goods offer
  • unemployment rate
  • gross domestic product
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7
Q

define the consumer price index

A

changes in price in relation to changes in price of goods/services

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8
Q

define producer price index

A

measure of price trends of producer/wholesaver
(what buisnesses are paying for the products they need)

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9
Q

define gross domestic product (GDP)

A

final value of goods and services produces by businesses located in the same nation.

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10
Q

define economic system

A

rules in which a society allocated economic resources

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11
Q

The spectrum of economic systems

A
  1. planned system: gov controls most factors of production
  2. free-market: decisions are made by buyers or sellers
  3. capitalism: economic freedom and competition.
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12
Q

nationalization vs privatization

A

nationalization– >taking owenership of chosen companies (from private to public)
privatization–> businesses go from public to private

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13
Q

Government role in a free market system

A

regulation–>rely more on laws +policies than market forces to govern economy
deregulation–> removal of regulations to allow market to correct itself over time.

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14
Q

4 major areas in which goverment plays a role in the economy

A
  1. protecting stakeholders
  2. fostering competition: so it does not become too strong.
    - use antitust legislation so competitors have equal chance
    - merger and acquisition approval–> prohbit from combining to preserve comp
  3. encourage innovation and economic development
  4. stabilizing and stimulating economy
    - monetary policiy–> regulates nations money supply- amount of spendable money in economy
    - fiscal policiy–> use gov revenue collection to infuelnce buisness cycle.
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15
Q

Define demand

A
  • amount of goods/services that customer will buy at a given time
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16
Q

describe the demand curve

A
  • as price changes, the number of purchases change
  • as price increases, demand decreases
  • as price decreases, demand icncreases
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17
Q

factors that affect demand

A
  1. income of customers
  2. customer preference
  3. price of substitute products
  4. price of complementary products
18
Q

define supply

A

quantities of goods/services producers will provide

19
Q

describe the supply curve

A

as price increases, the quantity suppliers are wiling to provide increases

20
Q

factors affecting supply

A
  1. cost of inputs (wages, fuel)
  2. number of competitors
  3. tech advanacemnts
21
Q

what is the relationship between supply and demand

A
  • equilibrium price: demand and supply intersect
22
Q

The 4 catergories of competiton

A
  1. pure competition-> many suppliers, none of them dominate market
  2. monopoly–> one company dominates and controls prices in market
  3. monopolistic competition–> many sellers are different from competitors allowing new suppliers to enter market
  4. oligopoly–> small number of suppliers provide a particular service or goods
23
Q

define recession

A

period of downward swing
if prolonged–> depression
period of recovery–> recession is over

24
Q

define buisness cycle

A

fluctuations in rate of growth that a business experience’s

25
Q

define unemployment

A
  • percentage of people without a job
26
Q

define inflation and deflation

A
  • inflation: price rise steadily
  • delfation: price drop steadily
27
Q

money definition

A
  • the means of paying a good or service
  • medium of exchange
  • accounting unit
  • temporary store of value
  • standard of deffered payment
28
Q

define fiat money

A

currencies issued by goverement proclamation

29
Q

define cyptocurrency

A

digital tokens

30
Q

influences cryptocurrencies have

A
  1. alternative to fiat currency
  2. disruptive force in global economics
  3. speculative investment
  4. disruptive tech
31
Q

define non-fungible tokens (NFTs)

A

digital currencies that convey sole ownership

32
Q

How to measure money supply

A
  1. M1–> money spendable now, cash held by public and money deposited in many accounts
  2. M2–>adds money that will be spendable soon
33
Q

Role of the federal reserve system

A

responsible for regulating banks and implementing monetary policy

34
Q

define federal funds rate

A
  • interest rate member banks charge to each other to borrow money overnight from funds they keep in federal resrve accounts.
35
Q

responsibilities of the federal reserve system

A
  1. monetary policy–> maximise employment, stable prices
  2. maintain stability of financial system by reducing risks.
  3. supervise financial institutions
  4. ensure secure and efficient payment systems
36
Q

define discount rate

A

interest rate members of bank pay when they borrow funds from fed

37
Q

define prime rate

A

interest rate bank charges best loan customers.

37
Q

investment banks role

A
  • provide a variety of investing and advisory services to organizational customers.
  • facilitate mergers, sales
  • manage and advise on investments
  • risk management advice
38
Q

commercial banks role

A
  • accept deposits
  • checking and savings accounts
  • provide loans
    types:
    1.retail banks: checking and savings account
    2. merchant banks:financial services to businesses and wealthy individuals
    3. credit unions: not-for profit member-owned cooperatives that offer deposit accounts
    4. private banking:wealthy individuals and families
39
Q

what are the three concerns

A
  1. shadow banking–> bank-like activities (mainly lending) that take place outside the traditional banking secto
  2. too-big-too fail dilemma–> fianncial institutions are so big that their failure would be disastrous to the economy.
  3. reinsatte the wall serppating investment banking and commercial banking
40
Q

define fintech

A

wide-range of technological innovations that have the potential to improve financial services or disrupt them.

41
Q

the five major categories of fintech innovations

A

financial services more inclusive
imrpove efficiency
strengh security
improve customer experience
enhance financial decision making

Management (17 decks)

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