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BEC > Economics, Strategy, Globalization > Flashcards

Economics, Strategy, Globalization Flashcards

1
Q

Focuses on the behavior and purchasing decisions of individuals and firms

A

microeconomics

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2
Q

the quantity of a good or service that consumers are willing and able to purchase at a range of prices at a particular time

A

demand

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3
Q

occurs when demand variables, other than price, change

A

Demand curve shift

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4
Q

Goods (i.e. bread, potatoes) whose demand gos up as consumer income (wealth) goes down

A

Inferior goods

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5
Q

Ed=% Change in quantity demanded/% Change in price=(Q2-Q1)/Q1/(P2-P1)/P1

A

Price Elasticity of demand

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6
Q

Demand is elastic–sensitive ot price changes

A

When Price Elasicity of Demand is >1

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7
Q

Demand is unitary–not sensitive or insenstitive ot price changes

A

When Price Elasticity of Demand is =1

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8
Q

Demand is inelastic–not sensitive to price changes

A

When Price Elasticity of Demand

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9
Q

=(Percentage change in quantity demanded)/(Percentage cahnge in income) Positive for normal goods, negative for inferior goods)

A

Income Elasticity of Demand

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10
Q

=(Percentage change in the quanitty demanded of Product X)/(Percentage change in the price of Product Y) –If positive, goods are substitutes –If negative, goods are complements –if 0, goods are unrelated

A

Cross Elasticity of Demand

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11
Q

As the price of a good falls, con sumers will use it to replace similar goods

A

Substitution effect

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12
Q

As the price of a good falls, consumers can purchase more with a given level of income

A

Income effect

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13
Q

as a person increases consumption of a product - while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

A

Law of Diminishing Marginal Utility

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14
Q

A curve used in economics which shows how consumers would react to different combinations of products –used to evaluate marginal utility

A

Indiferrence curves

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15
Q

represents the combinations of goods and services that a consumer can purchase given current prices with his or her income

A

Budget Constraint

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16
Q

The amount of income that individuals receive and have available to purchase goods and services (after receiving transfer payments from the government andpaying taxes)

A

Personal Disposable income

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17
Q

Depicts the relationship between changes in personal disposable income and consumption C=C0+(C1*YD)

A

Consumption function

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18
Q

An economic term for the amount that consumption changes in response to an incremental change in disposable income

A

Marginal Propensity to Consume (MPC)

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19
Q

The percentage of additional income that is saved

A

Marginal Propensity to Save (MPS)

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20
Q

The percentage change in the quantity supplied of a product resulting from a change in the product price =(% change in quanitty supplied)/(% change in price)

A

Elasticity of Supply

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21
Q

The price at which all the goods offered for sale will be sold (quantity demanded=quanitty supplied)

A

Equilibrium Price

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22
Q

A specified maximum price that may be charged for a good, usually established by a government–if set below equilibrium, will cause shortages because suppliers will spend time producing other goods

A

Price ceiling

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23
Q

A specified minimum price that may be charged for a good, usually establsihed by a government–if set above equilibrium, will cause surplus

A

Price floor

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24
Q

Used to describe damange to common areas that is caused by the production of certain goods (ex. pollution)

A

Externalities

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25
Q

Fixed cost per unit of production –decreases as more units are produced

A

Average fixed cost (AFC)

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26
Q

Total variable costs/ # units produced -Initially stays constant until the inefficiencies of pdoucing in a fixed-size facility cause variable costs to begin to rise

A

Average variable cost (AVC)

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27
Q

The cost of producing one extra unity -initially decreases then beginsto increase due to ineffiencies

A

Marginal Cost (MC)

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28
Q

Total costs/# units produced –behavior depends on the makeup of fixed and variable costs

A

Average Total Cost (ATC)

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29
Q

In LR, output increases in same proportion as increases in production

A

Constant returns to scale

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30
Q

in LR, output increases by a greater proportion as increases in production

A

Increasing returns to scale

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31
Q

In LR, output increases by a smaller proportion than increases in production factors

A

Decreasing returns to scale

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32
Q

The amount of profit necessary to compensate the owners for their capital and/or managerial skills–just enough to keep a firm in business in the LR

A

Normal profit

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33
Q

the amount of profit in excess of normal profit–does not exist in a perfectly competitive market in the LR

A

Economic Profit

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34
Q

the additional revenue received from the sale of one additional unit of product

A

Marginal revenue

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35
Q

the additional cost incurredfrom the production of one additional unit of product

A

Marginal cost

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36
Q

the additional output obtained from employing one additional unit of a resource (ex. one more worker)

A

Marginal product

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37
Q

the change in total revenue from emplopying one additional unit of a resource

A

Marginal revenue product

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38
Q

=Marginal Revenue Product/ Marginal Product

A

Marginal revenue per-unit

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39
Q

The price of all goods and services produced bya domestic economy for a year at current market prices

A

Nominal Gross Domestic Product (GDP)

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40
Q

The price of ALL goods and services produced by the economy at a price level adjusted (constant) prices (i.e. with effects of inflation eliminated)

A

Real GDP

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41
Q

the maximum amont of production that could take place in an economy without putting pressure on the general level of prices

A

Potential GDP

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42
Q

difference between potential GDP and real GDP –if positive, means there are unemployed resources –if negative, means that the economy is running above normal capacity

A

GDP gap

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43
Q

GDP minus depreciation

A

Net Domestic Product (NDP)

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44
Q

The price of all goods andservices produced by labor and property suplied by the nation’s residents

A

Gross National Product (GNP)

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45
Q

Curve depicting the demand of consumers, businesses, and government as well as foregin purchasers for the goods and services of hte economy at different price levels

A

Aggregate demand curve

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46
Q

As price levels increase, nominal interest rates increase causing a decrease in interest sensitive spending (i.e. homes, automobiles, appliances)

A

Interest Rate Effect

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47
Q

When price levels increase, the market value of certain financial assets decreases cauusing individuals to have less wealth and therefore they reduce their consumption

A

Wealth effect

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48
Q

When domestic price levels increase relative to foreign currencies,foreign products become less expensive causing an increase in imported goods and a decrease in exported goods, decreasing the aggregate demand for domestic products

A

International purchasing power effect

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49
Q

Occurs when the output level of the economy creates just enough spending to purchase the entire output

A

Equilibrium GDP

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50
Q

Refers to the fact that an increase in spending by consumers, businesses, or hte government has a multiplied effect on equilibrium GDP

A

The multiplier

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51
Q

a fluctuation in aggregate economic output that lasts for several years

A

business cycle

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52
Q

businesses that perform better in periods of expansion and worse in periods of recession

A

cyclical businesses

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53
Q

businesses that are affected little by business cycles using economic indicators

A

defensive businesses

54
Q

nominal rate - inflation premium

A

Real interest rate

55
Q

expenditures made by businesses based on expected profitability htat are independent of the level of national income (i.e. constant regardless of if economy is expanding/contracting)

A

Autonomous investment

56
Q

incremental spending based on an increased level of economic activity

A

Induced investment

57
Q

States that as economic activity increases, capital investment must e made to meet the level of increased demand, which in turn creates additional economicc demand which further feeds the economic expansion

A

Accelerator theory

58
Q

unemployment that occurs because individuals are forced or voluntarily change jobs (new entrants fall into this category)

A

Frictional unemployment

59
Q

Unemployment that occurs due to changes in demand for products or services, or technological advances that cause not as amny individuals witha particular skill to be needed

A

Structural unemployment

60
Q

unemployment caused by the condition in which real GDP is less than potential GDP

A

Cyclical unemployment

61
Q

the rate of increase in the price level of goods and services,usually measured on an annual basis

A

Inflation

62
Q

the ter used to descrive a decrasein the price levels of goods and services–very damaging

A

Deflation

63
Q

measures the price that urban consumers paid for a fixed basket of goods and services in relation to hte price of hte same goods and services purchased in some base period

A

Consumer price index (CPI)

64
Q

measures the prices of finished goods and materials at htewholesale level

A

The producer price index (PPI)

65
Q

MEASURES THE PRICES FOR NET EXPORTS, INVESTMENT, OGVERMENT EXPENDITURES, AND CONSUMER SPENDING –THE MOST COMPRENSIVE MEASURE OF PRICE LEVEL

A

the GDP deflator

66
Q

inflation caused by aggregate spending exceeding the economy’s normal full-employment output capacity (real GDP>potential GDP)

A

Demand-pull inflation

67
Q

inflation caused by increasing hte cost of producting goods and services

A

Cost-push inflation

68
Q

the price paid for the use of money

A

Interest rates

69
Q

interest rate in terms of goods that are adjusted for inflation

A

Real interest rate

70
Q

Interest rate in terms of the nation’s currency

A

Nominal interest rate

71
Q

the risk that the firm will not pay the interest or princiapl of the loan

A

Credit risk

72
Q

An increase in deficit, either ddue to an increase in government spending or to a decrease in taxes

A

Fiscal expansion

73
Q

A decrease in deficit due to increase in taxes

A

Fiscal contraction

74
Q

A committee in the Federal Reserve responsible for buying/selling U.S. securities

A

Federal Open-Market Committee (FOMC)

75
Q

If the central bank is purchasing overnment secruties and expanding hte money supply

A

Expansionary open-market operation

76
Q

Occurs wehn a central bank is selling government securities (and therefore decreasing hte money supply)

A

Contractionary open-market operations

77
Q

Theory that holds that market eqilibrium will eventually resultin full employment over htelong run wihtout government intervention

A

Classic economic theory

78
Q

theory that holds that the economy does not necessarily move towards full employment on its own and focuses on the use of fiscal policy (taxes) to stimulate hte economy

A

Keynesian theory

79
Q

theory that holds that fiscal policy is too crude a tool for control of hte economy, and focuses on the use of monetary policy to control economic growth

A

Monetarist theory

80
Q

theory that holds that bolstering an ecnomoy’s ability to suppply mopre goods is the most effect way to stimulate growth–can be done through reduction in taxes

A

Supply-side theory

81
Q

theory that combines Keynesian and monetarist htoeries and focuses on using a combination of fiscal and monetary poicy to stimulate hte economy and contorl for inflation

A

Neo-Keynesian theory

82
Q

a tax on an imported product

A

import tariff

83
Q

a striction on the amount of a good that may be imported during a period

A

import quota

84
Q

a total ban on the importation of specific goods

A

embargo

85
Q

elected by an exporting country to limit the quality of goods that can be exported to appease importing countries and keep them from imposing stiffer import restrictions

A

voluntary export restraint

86
Q

a control imposed bya governmenton the purchase or sale of foreign currencies by residents, or on the purchase or sale of local currency by nonresidents

A

foreign-exchange control

87
Q

A form of predatory pricing in which a manufacturer in one country exports a product at a price that is lower than the price charged in its home country–prohibited by WTO

A

dumping

88
Q

payments made by a government to encourage the production and export of specific products (ex. special tax benefits)

A

export subsidies

89
Q

duties imposed by an importing country to neutralize the negative effects of export subsidies

A

countervailing duties

90
Q

organization of countries designed to supervise and liberalize trade among participating countries

A

World Trade Organization

91
Q

free trade agreement between Canada, Mexico, and U.S.

A

North American Free Trade Agreement (NAFTA)

92
Q

an account summary of a nation’s trnasactions with other nations (3 sections: current acount, capital account, official reserve account)

A

Balance of Payments

93
Q

Part of the balance of payments that shows the flow of goods andservices and government grants for aperiod of time

A

Current account

94
Q

the difference between teh total goods exported and total goods imported

A

balance of trade

95
Q

the difference between the total VALUE of goods and services esported and the total VALUE of goods and services imported

A

balance on goods and services

96
Q

when a nation exports more than it imports

A

trade surplus

97
Q

when a nation imports more than it exports

A

trade deficit

98
Q

part of the balance of payments that shows the flow of investments in fixed and financial assets for a period of time

A

capital account

99
Q

part of balance of payments that shows the changes in the nation’s rserves (gold and ofreign currency)

A

official reserve account

100
Q

a pool of currencies from which member countreis can borrow to meet short-term deficits in balance of payments

A

International Monetary Fund (IMF)

101
Q

a group of finanice ministers and central bank governers from 20 economies that seek to address issues affecting global financial stability

A

G-20

102
Q

establishes monetary policy for members in the eurozone

A

European Union (EU)

103
Q

the way a country manages its currency in respect to currencies of other countries

A

exchange rate regime

104
Q

exchange rate is dictated by market factros

A

Floating exchange rate

105
Q

a country’s central bank keeps the exchange rate from ddeviating too far from a target band or value

A

pegged exchange rate

106
Q

an exchange rate is teid to the value of another currency

A

fixed exchange rate

107
Q

an exchange rate where the country’s central bank attempts to control the movement in currency value

A

managed exchanged rate

108
Q

the exchange rate of the currency for immediate delibery

A

spot rate

109
Q

the exchange rate for a currency for future delivery

A

forward rate

110
Q

a contract to take delibery of a specifiedfinancial instrument at a specified future date at the then-market price

A

future contract

111
Q

forward-based contracts in which two parties agree to exchange an obligation to pay cash flows in one currency for an obligation to pay in anohter currency

A

currency swaps

112
Q

borrowing and lending in multiple currencies

A

money market hedge

113
Q

the exposure that a multinational company has because its financial statements must be converted to tis funcitonal currency

A

translation risk

114
Q

the possibility of gians/losses resulting from income transactiosn occurring during a year when foreign exchanges occur

A

transaction risk

115
Q

risks that threaten management’s ability to execute strategies and achieve the firm’s objectives

A

Business risks

116
Q

A study of all segments in the general environment to predict he effects of hte general environment on the firm’s industry

A

Scanning

117
Q

A study of environmenmental changes identified by scanning to spot important trends

A

Monitoring

118
Q

Developing probably projections of what might happen and its timing

A

Forecasting

119
Q

Determining changes in the firm’s strategy that are necessary as a result of hte information obtained from scanning, monitoring, and ofrecasting

A

Assessing

120
Q

An industry composed of a large number of sellers that sell a virtually identical product with no barriers to entry

A

Perfect (Pure) competition

121
Q

A market in which there is a single seller of a product or service for which there are no close substitutes

A

Pure monopoly

122
Q

Monopolies that exist when economic or technical conditions permit only one efficient supplier

A

Natural monopoly

123
Q

an industry characterized by many firms selling a differentiated product or service with product or service innovation

A

Monopolistic competition

124
Q

A form of market characterized by few large sellers with significant barriers to entry and nonprice competition

A

Oligopoly

125
Q

A market where only one buyer exists for all sellers

A

Monopsony

126
Q

Industry analysis that involves gathering info about competitor’s capabilities, objectives, strategies, and assumptions and using that inofmrmation to understand the competitor’s behaviors

A

Competitor analysis

127
Q

A list of possible actions that a competitor may take under varying circumstances, compiled after competitive analysis is conducted

A

Response profile

128
Q

A cost reduction technique that involves a critical evaluation and major reddesign of existing processes to achieve breakthrough improvements in performace

A

Process reengineering

129
Q

A cost reductionm technique that involves the identification and elimination of all types of waste in the production function

A

Lean manufacturing

130
Q

A cost reduction strategy that involves the sharing of key ifnromation from the point of sale to the final consumer back to the manufacturer and suppliers

A

Supply Chain Management

131
Q

collaborative agreements between two or more firms

A

Strategic alliances

BEC (7 decks)

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