Chapter 2: How Economic Issues Affect Business Flashcards
Economics
The study or how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
Macroeconomics
Economics that looks at the nations economy as a whole
Microeconomics
Part of economics that looks at the behavior of people and organizations in particular markets
Resource development
The study of how to increase resources and the creation of the conditions that will make better use of those resources
Eg recycling
Invisible hand
Coined by Adam smith
Process that turns self directed gain into social and economic benefits for all
Capitalism
An economic system in which all or most factors of production are privately owned
Supply
The quantity of products that manufactures or owners are willing to sell at different prices at a specific time
Demand
The quantity of products that people are willing to buy at different prices at a specific time
Market price
The price determined by supply and demand
4 types of competition
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
Perfect competition
The market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product
Example: farms
Monopolistic competition
The market situation in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
Fast food industry
Oligopoly
A form of competition in which a few selllers dominate the market
Monopoly
A market in which there is only one seller for a product or service
Socialism
Economic system based on the premise that some, if not most, basic businesses should be owned by the government so profits can be distributed evenly
Brain drain
The loss of educated people to other countries
Communism
Economic and political system in which the state makes all economic decisions and owns almost all of the production
Free market economy
Economy in which the market largely determines what goods and services are produced, who gets them, and how the economy grows
Command economy
Economy in which the government largely decides what’ goods and services are produced, who gets them, and how the economy will grow
Examples: socialism and communism
Mixed economies
Economic systems in which some allocation of resources is made by the market and some by the government
Gross domestic product (GDP)
The total value of goods and services produced in a country in a given year
Unemployment rate
The percentage of the labour force that actively seeks work but is unable to find work at a given time
Inflation
A general rise in the prices of goods and services over time
Disinflation
A situation in which price increases are slowing (the rate of inflation is declining)
Deflation
A situation in which prices are declining
Stagflation
A situation in which the economy is slowing but prices are going up regardless
Consumer price index (CPI)
A monthly statistic that measures the pace of inflation or deflation
Human development index (HDI)
A measure of a countries progress that includes wealth, health, and education
Business cycles (economic cycles)
The periodic rises and falls that occur in economies over time
Boom
A period that brings jobs, growth, and economic prosperity
Recession
Two or more consecutive quarters of decline in the GDP
Depression
A severe recession
This is rare
Recovery
When the economy stabilizes and starts to grow
Four types of economic systems (KNOW THIS)
Capitalism
Communism
Socialism
Mixed economy
