Chapter 2: How Economic Issues Affect Business

Question 1

Economics

Answer 1

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

Question 2

Macroeconomics

Answer 2

Economics that looks at the nations economy as a whole

Question 3

Microeconomics

Answer 3

Part of economics that looks at the behavior of people and organizations in particular markets

Question 4

Resource development

Answer 4

The study of how to increase resources and the creation of the conditions that will make better use of those resources

Eg recycling

Question 5

Invisible hand

Answer 5

Coined by Adam smith

Process that turns self directed gain into social and economic benefits for all

Question 6

Capitalism

Answer 6

An economic system in which all or most factors of production are privately owned

Question 7

Supply

Answer 7

The quantity of products that manufactures or owners are willing to sell at different prices at a specific time

Question 8

Demand

Answer 8

The quantity of products that people are willing to buy at different prices at a specific time

Question 9

Market price

Answer 9

The price determined by supply and demand

Question 10

4 types of competition

Answer 10

Perfect competition
Monopolistic competition
Oligopoly
Monopoly

Question 11

Perfect competition

Answer 11

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

Question 12

Monopolistic competition

Answer 12

The market situation in which a large number of sellers produce very similar products that buyers nevertheless perceive as different

Fast food industry

Question 13

Oligopoly

Answer 13

A form of competition in which a few selllers dominate the market

Question 14

Monopoly

Answer 14

A market in which there is only one seller for a product or service

Question 15

Socialism

Answer 15

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

Question 16

Brain drain

Answer 16

The loss of educated people to other countries

Question 17

Communism

Answer 17

Economic and political system in which the state makes all economic decisions and owns almost all of the production

Question 18

Free market economy

Answer 18

Economy in which the market largely determines what goods and services are produced, who gets them, and how the economy grows

Question 19

Command economy

Answer 19

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

Question 20

Mixed economies

Answer 20

Economic systems in which some allocation of resources is made by the market and some by the government

Question 21

Gross domestic product (GDP)

Answer 21

The total value of goods and services produced in a country in a given year

Question 22

Unemployment rate

Answer 22

The percentage of the labour force that actively seeks work but is unable to find work at a given time

Question 23

Inflation

Answer 23

A general rise in the prices of goods and services over time

Question 24

Disinflation

Answer 24

A situation in which price increases are slowing (the rate of inflation is declining)

Question 25

Deflation

Answer 25

A situation in which prices are declining

Question 26

Stagflation

Answer 26

A situation in which the economy is slowing but prices are going up regardless

Question 27

Consumer price index (CPI)

Answer 27

A monthly statistic that measures the pace of inflation or deflation

Question 28

Human development index (HDI)

Answer 28

A measure of a countries progress that includes wealth, health, and education

Question 29

Business cycles (economic cycles)

Answer 29

The periodic rises and falls that occur in economies over time

Question 30

Boom

Answer 30

A period that brings jobs, growth, and economic prosperity

Question 31

Recession

Answer 31

Two or more consecutive quarters of decline in the GDP

Question 32

Depression

Answer 32

A severe recession

This is rare

Question 33

Recovery

Answer 33

When the economy stabilizes and starts to grow

Question 34

Four types of economic systems (KNOW THIS)

Answer 34

Capitalism
Communism
Socialism
Mixed economy