Chapter 4 Flashcards
What measures the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty?
Economic Freedom
What kind of countries tend to have higher per-capita income, standards of living, and social stability?
Economically-free countries
How did the global financial crisis effect markets?
Challenged the legitimacy of free markets; governments in many countries have expanded their regulation of the economy to manage the consequences
In this economy, private interests own resources while price and quantity, conveyed via the invisible hand, determine supply and demand
Market economy
In this economy, the government plans what goods and services a country produces, the quantity in which they are produced and the price at which they are sold
Command economy
This economy includes some of the elements of market and command economics; both influence investment activities and consumption behavior
Mixed economy
This economy endorses the doctrine of capitalism, its principles of the invisible hand and laissez-faire and the goal of maximizing economic freedom
Market economy
This economy endorses the doctrine of communism, its principle of an active government that commands and controls most if not all factors of production, and the goal of constraining economic freedom
Command economy
This economy endorses the doctrine of socialism, its principle of the partly visible hand of an activist government that commands and controls some factors of production, and the goal of regulating economic freedom
Mixed economy
A system whereby the government manipulates market outcomes for political purposes is called:
State capitalism
How do managers assess markets?
In terms of size, income, and sustainability
What measures of economic performance call for considering ecological aspects that support sustainable development?
Green measures of economic performance
Concerns that monetary measures misestimate economic performance leads to what?
Calls to expand the concept of prosperity to include aspects of happiness
Managers use several indicators to assess the performance and potential of an economy, including:
Inflation, unemployment, debt, income, distribution, poverty, and the balance of payments
What is the next market frontier, according to some analysts?
The base of the pyramid of economic groups
The largest but poorest socioeconomic group in the world, in terms of individual wealth, is the:
Base of the pyramid
Global indices help managers develop a holistic profile of particular markets in terms of:
Competitiveness, innovation, and quality of life
“Let it be”
Laissez-faire
Laissez-faire is most closely connected to what type of economy?
Market economy
Private ownership confers inalienable property rights that legitimize profits earned by one’s initiative, investment, and risk
Capitalism
An economic system whereby individuals, rather than the government, make most decisions
Market economy
Government that champions state ownership of resources and control of all economic activity
Communism
Estimates the extent to which a government constrains free choice and free enterprise for reasons that go beyond the need to protect property, liberty, safety, and efficiency
Economic freedom index
The absolute right of property ownership, fully-realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself
Economic freedom
Economic system in which the government owns and controls resources, taking on the authority to decide what products to make, in what quantity, at what price, and in what way
Command economy
Economic system that falls between the market and command economies; it is a system in which economic decisions are principally market driven and ownership is largely private but the government intervenes from a little to a lot in allocating resources
Mixed economy
Government that advocates regulating economic activity with an eye toward social equality and fair distribution of wealth
Socialism
Efficiently summarize the economic activity of households, business, and government in terms of their consumption, investment, spending, and trading
Gross National Income (GNI) or Gross National Product (GNP)
What calls for moving “from the concept of financial prosperity to the idea of emotional prosperity”?
Happynomics
The sustained rise in prices measured against a standard level of purchase power
Inflation
The opposite of inflation, prices for products go down
Deflation
Increasing the money supply and reducing taxes to accelerate economic activity- to combat deflation
Reflation
The share of out-of-work citizens seeking employment for pay relative to the total civilian labor force
Unemployment rate
The sum of a country’s inflation and unemployment rates
Misery index
When misery rate is higher, what happens?
Greater economic misery, the more likely consumers curtail spending companies curb investments, and society confront austerity
The total of a governments financial obligations, measures what the state borrows from its citizen’s foreign governments and international institutions
Debt
What often defines a market’s performance and potential?
Income distribution
This estimates the degree of inequality in a country’s distribution of income
GINI coefficient
A multidimensional condition whereby a person or community lacks the essentials for a minimum standard of well-being and life
Poverty
Officially known as the statement of international transactions, reports its trade and financial transactions with the rest of the world
Balance of payments (BOP)
Who is included in the “Base of the Pyramid” phenomenon?
The nearly four billion people, primarily Asians, who make less than $4 (US) per day
