ECONOMICS AND FINANCE Flashcards
What is Finance?
Finance is the management of money with the goal to increase wealth
What is Capital?
Capital is the wealth in a form of money or other assets held by a person or
organization
What is Opportunity Cost?
The cost of one economic decision expressed in terms of the next best
alternative foregone.
Market Economy
An economic system in which production and prices are determined by
unrestricted competition between privately owned businesses.
Planned Economy
An economy in which production, investment, prices, and incomes are
determined centrally by the government.
Mixed Economy
An economic system combining private and state enterprise
What is a Modaraba?
Modaraba is a profit-sharing contractual arrangement between an investor and
a managing trustee.
What is a Giffen Good?
A good where quantity demanded increases when price rises.
What is Price Elasticity of
Demand?
A measure of the extent of changes in the market demand for a good in
response to a change in price
What are Economies of Scale?
Factors which lead to the overall decrease in unit cost, as output increases.
These are usually costs which have similar characteristics to fixed costs, and can
be spread out amongst ever greater units, hence reducing the average cost.
What are Diseconomies of
Scale?
Factors which lead to the overall increase in unit cost, as output increases. These
are often a result of managers/staff losing control/motivation as
production gets greater.
What is a Monopoly?
A market structure where there is just one firm supplying to the whole market.
What is Price Discrimination?
The action of selling the same product to different groups of buyers at different prices in order to maximise profits.
What is Collusion?
Collusion is a non-competitive, secret, and sometimes illegal agreement
between rivals which attempts to disrupt the market’s equilibrium. The aim is to
gain an unfair market advantage
What is GDP?
GDP stands for Gross Domestic Product. It is the total monetary value of all the
goods and services of a country produced and rendered within a specific period
What is Inflation?
A continuous increase in the general price level.
What is Deflation?
A continuous fall in the general price level
What is Economic Growth?
Economic growth is a long-term expansion of a country’s production potential.
What is Fiscal Policy?
Fiscal policy is government policy on taxation, spending and government
borrowing.
What is Monetary Policy?
Monetary policy consists of the management of money supply and interest rates
to achieve macroeconomic objectives such as controlling inflation, consumption
and growth.
What is Balance of Payments?
The balance of payments measures the financial transactions made
between consumers, businesses and the government in one country with
others.
What is a Capital Market?
The financial market which is largely used to raise long-term finance and capital
What are the Environmental Factors?
P – Political and legal factors
E – Economic factors
S – Social, cultural and demographic influences
T – Technological factors.
E – Ecological
L – Legal
What are Stakeholders?
A stakeholder in an organization is a person who has an interest in what
the organization does, and who might therefore try to influence the
decisions and actions of the organization
What is Outsourcing?
Outsourcing is the business practice of hiring a party outside a company
to perform services and create goods.
What is a Virtual Company?
It is an organization that uses computer and telecommunications
technologies to work routinely with outsourced employees or
contractors. It has no office, no substantial assets and a few full-time
employees
What is Downsizing?
Downsizing means the reduction in size of a business organization. It
means that its business activities are conducted by a smaller number of
people
What is SWOT analysis?
SWOT analysis is an analysis of strengths, weaknesses, opportunities and
threats. It is a simple but useful technique for analyzing strategic
position
What are the Factors of Michael Porter’s
Five Forces Model?
(Factors that determine
competitiveness)
- Threats from potential entrants
- Threats from substitute products or services
- The bargaining power of suppliers
- The bargaining power of customers
- Competitive rivalry within the industry or market.
What is a Value Chain?
A value chain is a series of activities, each of which adds value. These
activities within and around an organization create a product or service.
Primary Value Chain activities:
- Inbound logistics
- Operations
- Outbound Logistics
- Marketing and Sales
- Service
Secondary Value Chain activities:
- Purchasing
- Technology support
- Corporate Services
- Human resource
What is an Organization?
An organization is a social arrangement for the controlled performance
of collective goals.
What is an Organizational Structure?
An organizational structure is the formal arrangement within an
organization that defines how activities and tasks are formally divided
and how processes and information would flow within this structure.
What are the types of Organizational
Structures?
- Entrepreneurial – the entrepreneur is the sole decision maker
- Functional – Small to Medium Sized Organization – groups of people
performing similar tasks - Matrix – multiple commands systems - dual reporting relationships
- Divisional – Large entities – Divisions of activities operating like a
standalone entity - Specific centralized tasks
What is a Team?
A team is a group of people using shared resources in order to achieve
common goals.
What is a Workgroup?
Workgroups are groups formed by individuals to perform a common
goal or promote similar thoughts and purpose.
What is Negotiation?
A formal process that occurs when parties are trying to find a mutually
acceptable solution to a complex conflict.
What is an ERP?
Enterprise resource planning (ERP) is a software that allows an
organization to use a system of integrated applications to manage the
business and automate many back-office functions related to
technology, services and human resources.
What is Corporate Social Responsibility?
Corporate Social Responsibility is a management concept whereby
companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.
What is a Blockchain?
It is a decentralized distributed ledger that records transactions between
two parties. It moves transactions from a centralized server-based
system to a transparent cryptographic network. The technology uses
peer-to-peer consensus to record and verify transactions, removing the
need for manual verification.
What are Economic Sanctions?
Economic sanctions are commercial and financial penalties applied by
one or more countries against a targeted self-governing state, group, or
individual. They may be imposed due to economic circumstances as well
as a variety of political, military, and social issues.
