Literature Flashcards
1
Q
How do banks increase the amount of money in circulation.
A
They loan out the money deposited over and over again, letting multiple people use the same amount.
2
Q
What does credit do
A
Allow us to build the present at the expense of the future.
3
Q
Explain the circle of progress in the modern economy
A
Trust in future=> Credit=> pay COGS=> Profit=> loans payed back => more trust
4
Q
How is greed good?
A
To maximize wealth, corporations transfer wealth for time which leads to heightened demand for products from the general populace leading to increased corporate wealth perpetuating cycle of prosperity.
5
Q
What is the assumption required for altruistic egoism.
A
That wealth is reinvested for further growth.
6
Q
What is the capitalist creed
A
Reinvest profits
7
Q
What differs capital from wealth
A
Capital is invested in production
8
Q
What defines capitalism
A
Property rights, Markets and firms
9
Q
What is financial accounting
A
It is the way to communicate the past present and future financial status of the company to its owners.
10
Q
Which financial statement is regulated publicly.
A
The closing statement.
11
Q
What questions do accounts illuminate
A
Is the organization making money? Is their money in the organization? If so whose money?
12
Q
What is an example of a resource
A
Machinery and employes
13
Q
What is a stakeholder
A
An entity that provides the resources the company relies on.
14
Q
What is the stakeholder model
A
A model illustrating the organization in the middle surrounded by the owners, creditors, authorities, employees, customers, suppliers, trade unions and ngo’s. Describing entities that the org relies on.
15
Q
Why must the organization fulfill the stakeholders demands and expectations
A
To maintain trust to ensure continued access to the land, labor and capital the company relies on to survive
16
Q
What does it mean for a company to be legitimate
A
To be seen as taking responsibility for issues stakeholders find important
17
Q
What does it mean that legitimacy is contagious in accounting
A
That if one company provides certain information the stakeholders expect the same from others leading to uniformity.
18
Q
Explain the principle agent model
A
It is when a principle relies on an agent to do its biding creating potential issues due to information assymetry
19
Q
Explain information assymetry
A
When for example both parties know that an agent has greater insight in matters regarding the principles assets.
20
Q
How can information asymmetry be addressed.
A
By frequent reporting and inventive structures
21
Q
Why do shareholders and lenders need companies to account
A
To see if they are fit to put their money into and where that money then goes.
22
Q
Why do tax authorities need companies to account.
A
To know how to collect taxes fairly
23
Q
What is the effect of accounting on the overall economy
A
It generates trust which perpetuates the wheel of prosperity by allowing stock markets and banks bridge the information assymetry
24
Q
Why do customers need companies to accont
A
To determine if the companies financial situation will hinder their delivery
25
Why should you learn accounting
Because it is allegedly fun and useful
26
What are the types of financial statements
Income-statement, balance sheet, cashflow statement and notes
27
What is the official definition of accounting
The activity of recording transactions, resources and claims, as well as to present a summary in the form of financial statements supplemented by additional information.
28
What is the differences between financial and management accounting
Management accounting is for upper management and is thus more detailed and unregulated while financial accounting is for stakeholders and is partly regulated and standardized
29
What is management controle
Using management accounting to implement strategies, culture and values
30
What are organizational processes
When multiple people try to achieve a complete common goal.
31
What is organization theory
How an activity can be divided and how these parts can be coordinated into a value adding process
32
What is theoretical pluralism or multi frame analysis
To use multiple often contradictory theories, models or points of view to analyze a situation
33
Which are the two modern organizational frameworks
The structural framework and the hr franework
34
Describe the structural framework
To analyze the organization based on its rules and material incentive structures to see how they guide a rational actor to strengthen the organization
35
What does the structural framework assume about humans.
That they are rational actors who act to maximize their material wealth
(homo economicus)
36
What analysis framework focuses on Efficient processes, specialization and coordination
The structural franework
37
Describe the hr framework
An organizational analysis framework that looks at how the needs of the organization members are fulfilled so that they can work well to strengthen the organization.
38
What does the hr framework assume about humans
That they like to work and will do so if they are given proper means.
(homo ludens)
39
What analysis framework espouses committed employees for a successful organization.
The hr framework
40
What are two contemporary organization analysis frameworks
The power framework and the symbolic framework
41
Describe the power framework
An organizational analysis framework that maps the political landscape and analyzes how one might act to advantage some at the expense of others
42
What does the power framework assume about humans
That conflict and power struggles are inevitable as actors have different interests. It assumes that humans strive to increase their power
(homo potestas)
43
What are the pros and cons of the power framework
A pro is that it vanquishes power blindness but a con is that it might miss opportunities for rational and common solutions.
power hyperfixation
44
Describe the symbolic framework
An organization analysis framework where symbols, (common art, language etc) of the organization and the surrounding culture is analyzed to assess how to strengthen the organization.
45
What does the symbolic framework assume about humans.
That humans are a product of their cultural and thus symbolic context as they seek meaning
(homo socialis)
46
What is critical social theory
To analyze an organization with an emancipatory lens. To shed light on perceived injustices with the objective to present a way organizations could work as opposed to unbiased analysis.
47
What is marketing according to the Chartered institute of marketing
The process of identifying, anticipating and satisfying customer needs.
A charter is used to plan ahead;)
48
How does the American marketing association define marketing
As the activity of creating and communicating offers of value to the recipient.
49
How do the french define marketing
As the strategy of competitive actors to present themselves as superior compared to the competition
50
What is an offering or proposition in a marketing context.
The formulation of benefits an actor provides.
51
What is the difference between a customer and a consumer
A customer pays while a consumer uses. So for example this service have you as a consumer but whoever pays for it as a costumer
52
What is market orientation
It means to have an awareness of the market customer orientation, competitor orientation and your infrastructure coordiantion
53
What is customer orientation
Creating superior value by adapting to customers needs
54
What is competitor orientation
To understand your competitors short term strengths and weaknesses and their longterm capabilities and strategies
55
What is infrastructure coordination
To have the organizations functions work together for long term profit growth
56
What is market sensing
Understanding strategic implications of the market
57
What fields is marketing influenced by
Industrial economics, psychology, sociology, anthropology and computer science
58
What is the difference between sales and marketing
Sales focus more on the short term product push while marketing is more research and longterm product pull
59
What is the core of marketing competences
Insights championing the customer strategy
60
In what different contexts do marketing take place
Consumer goods (aka business to consumer) industrial (aka b2b) and services
61
What is aggregate demmand
The total amount of demand in a population
62
What is the promotional mix
Advertising, personal selling, digital and direct marketing as well as public relations.
63
What is the winners curse
That the winner becomes liable to pay in a bidding war which can turn out unprofitable
64
What characterizes the consumer goods perspective
To sell as much as possible as fast as possible as buyers are many
65
What characterizes the service perspective regarding marketing
That services are not tangible and thus are harder to communicate and pattent
66
What characterizes the business to business perspective
That buyers are fewer and professional so trust is highly prioritized
67
What is macro marketing studies
The study of how marketing affect societies
68
What are the forces that decide the profitability of an industry
Bargaining power of suppliers, the threat of new entrants to the market, the bargaining power of buyers and potential substitutes. All increasing the power of industry competitors
69
What are the three generic strategies to outperform other firms.
Overall cost leadership, differentiation and focuse
70
Describe the strategy of overall cost leadership
To focus on efficiency and cut all cuttable costs to profit where others are at a loss
71
Describe the strategy of differentiation
Create brand loyalty by standing out
72
Describe the strategy of focuse
To cater to the needs of a specific demographic
73
What is required to implement a strategy of cost leadership
Sustained capital access, process engineering, intense supervision, low cost distribution, frequent reporting, structure, target based incentives
74
What are the requirements to implement a strategy of differentiation
Strong marketing, creative engineering, good research, strong ethos, good cooperation and coordination, subjective incentivizing and connections to stars
75
What do you need to implement a strategy of focuse
Depends on the group you focus on
76
Why is their often a U shaped relationship between profitability and market share.
Because the companies in the middle fail to utilize the benefits of the strategies.
77
What is a theory
A way of explaining observed patterns of associations between phenomena. The word is also often used simply to refer to background literature.
78
What is middle range theory
Theories supported by empirical findings confined to a limited space. Characterized by their application to specific phenomena.
79
What is grand theory
Perspectives on how the entire world works.
80
What are empiric findings
Observed measurable phenomena
81
Explain the process of deductive inquery
Theory => hypothesis => data collection => findings => revision of theory
82
What is possitivism
It is an epistemological position that builds on objectivism that states that research should be value free and build on measurable empirics.
83
What is naive empericism
That the accumulation of facts is a goal in its own right
84
Explain the inductive research method
Observations and findings lead to theory instead of starting with one as in the deductive model
85
What is abductive research
Research where collection of data and reflection on theory is mixed and circular.
86
What is theory testing research
Build test a theory by creating a hypothesis based on it and test it through statistical inference
87
What is inductive case research
Development of a theory based on qualitative data f.ex interviews
88
What is interpretive research regarding data and theory
Dialogical process between data and theory.
89
What is ontology
Philosophy of what reality is
90
What is objectivism
An ontological position that states that phenomena exists separate from the actors and observers. Things are seen as object and thus they have an objective reality.
91
What is constructionism
The ontological position that phenomena are made real by the actors and observers.
92
What is interpretivism
An epistemological framework that builds on constructionism that relies on the scientists interpreting phenomena to draw conclusions.
93
What is empirical realism
The assertion that through appropriate research methods objective reality can be understood
94
What are the four research paradigmes
Functionalist, interpratve, radical humanist and radical structuralist
95
What axels are the research paradigms built on
If things are interpreted subjectively or objectively and if the intention is radical (judgy) or regulatory (descriptive)
96
Describe the functionalist paradigme
Regulatory, objective. Tries to find the rational cause of a problem.
97
Explain the interpretive paradigme
Subjective, regulatory. Tries to understand based on the experiences of insiders
98
Explain the radical humanist paradigme
Aims to free humans from the claws of organization and researches how
99
Explain the radical structuralist paradigme
Research with the viewpoint of structural power relations and the resulting conflicts
100
What is a paradigme
A set of beliefs that that influence what is thought should be studied, how research should be done and interpreted
101
What does history’s hockey stick refer to
The immense increase in gdp per capita since the start of the industrial revolution
102
What are the two main ways division of labour is coordinated in a capitalist economy
By firms and markets
103
How do firms and markets differ in their coordination of the division of labor
A firm is an autocracy while all actors in a market are mostly independant
104
What is the difference between a labor contract and the sales contract
A labor contract gives the buyer time restricted authority over the seller while a sales contract transfers property rights.
105
What does property rights mean.
That the owner has right to use and restrict usage over the object and that the owner can transfer this right.
106
What is a residual claimant
Someone who claims the residual aka the profits, what is left of review after payments
107
What is the free rider problem in a corporation
That powerful agents such as managers abuse their position to enrich themselves when their is information asymmetry.
108
What is a common method to pay managers motivated by principle agent theory
To base their salary on the share price
109
What is an incomplete contract
A contract that does not mention all expectations of the parties
110
Why might contracts be incomplete
Because the claims might not be verifiable or measurable and there might future uncertainties or simple preference to not state some things.
111
What is malthusianism
The assumption that any increased wealth would be spent on larger families negating increase in living standards
112
What is the malthusian cycle
The cycle of increased population followed by famine that permeated preindustrial society without real increase in living standards
113
How is a model constructed
A circumstance is briefly described, then we describe its causes and outcomes and at last we test what changes when variables change
114
What is meant by ceteris paribulus
All things being equal. Ignore the noice of reality and change only one variable.
115
What is a relative price
One price relative to another for two largely similar products
116
What is economic rent
Economic rent = benefit - benefit from next best option. Opposite of opportunity cost
117
How does one evaluate cost of using different technologies
Cost = wage*worker + costOf*uses
118
What is an isocost line
A line connecting all combinations of labor and tech costing the same. Expressed as y=a+bx
Linear equation of combination
119
What is marginal change
The difference from the next point at the margin of a curve. F.ex if Alex gains a pound for every sandwich he eats during a day the marginal product is 1 pound
120
What is an indifference curve
A curve made up of a combination of things that consume a limited resource where different tradeoffs have presumed equal value.
121
What is opportunity cost
The fact that by doing one thing you might miss out on other opportunities.
122
What is the marginal rate of substitution
Measures the willingness for tradeof at the margin
123
What is marginal rate of transformation
Measures the tradeoff constrained by the feasibility frontier that marks where the opportunity cost becomes to high.
124
Given a graph showing an indifference curve and a feasibility frontier what combination is chosen.
MRS = MRT at the point the graphs intersect
125
What is a reservation price
The lowest price a good is willingly sold for. Lowest willingness to accept WTA
126
What is a supply curve
A curve showing how many goods would be produced at any given price.
127
What is a demand curve
A curve showing how many units would be bought at any given price
128
What is the equilibrium price
The price that equates both supply and demand
129
What is a nash equilibrium
A strategy that best matches the strategy of everyone else
130
What is the market clearing price
The price where there is equalibrium
131
What is a price taker
An actor that has many alternatives, such as a buyer among many sellers or a seller among many buyers
132
What is a competitive equalibrium
A market outcome where all actors are price takers and the outcome reaches supply demand equilibrium
133
What does it mean when the market clears
That the quantity demanded equals the quantity supplied
134
What is Pareto efficiency
A market outcome where no more beneficial transaction can be made
135
What constitutes a market failure
Pareto inefficiency both positive and negative
136
When is a market Pareto efficient
When production does not affect third parties
137
What is an externality or external effect when talking Pareto efficiency
A side affect of production imposing extra costs or benefits external to the contract
138
What is environmental spillover
That private benefits may impose external costs on others
139
Which distributions are generally considered not appropriately handled by markets
Distribution of repugnant goods (things people want to deny others selling) and merit goods (things people want to ensure everyone has)
140
Give some examples of repugnant markets
The drug market, human trafficking and selling votes
141
Give some examples of merit goods
Schooling, healthcare, protection by law
142
What positive effects can public policy have on markets
To moderate fluctuations in inflation and employment as well as improving working conditions, looking out for the long run and acting as a mediator
143
What is the aggregate econnomy
The sum pf all the economies parts
144
What is gdp
The aggregate output, the value of all products and services produced in an area for a year.
Gross Domestic Product
145
How can gdp be calculated
By the total spending on products, By the value added through production (not double counting value of input) and through the sum of all income received.
146
What is the formula for gdp
Y = (C)onsumption + (I)nvestment + (G)overnment spending + e(X)ports - i(M)ports
147
What is net exports or trade balance
Value of exports minus imports deciding if there is a trade surplus or deficit.
148
What are some shortcomings of GDP
It does not take externalities into account and is largely swayed by population
149
Why does inflation reduce debt
Because debt is denominated in a currency not a value so if the currency becomes less valued it is easier to repay the debt
150
What is fiscal policy
Macroeconomic controls done by the government. How they spend, tax, loan and inflate
151
What is monetarily policy
Macroeconomic policy done by the central bank. Setting interest rates
152
What is intermediate goods
Goods used in the production of other goods, not counted in gdp
153
What is conspicuous consumption
Consumptions others see and can get jealous by
154
How can trade negate fiscal stimulus
If the additional cash is spent on foreign goods it cannot kickstart the national economy as the money dos not go to wages and so no growing demand that can motivate increased supply.
155
How does imports dampen domestic fluctuations in price
Domestic producers are less likely to be affected by national problems or successes and as they are relatively isolated they don’t contribute as much to spirals
