Textbook Chapter 2 Flashcards
Can a single firm control the environment?
No, but managers should try to influence the environment
What is the economic environment?
Conditions of the economic system in which an organization operates
What is the business cycle?
A pattern of short-term ups and downs (expansions and contractions) in an economy
When does a depression occur?
When the trough of a business cycle extends two or more years
What is aggregate output?
Total quantity of goods and services produced by an economic system during a given period
What is standard of living?
Total quantity and quality of goods and services that a country’s citizens can purchase with the currency used in their economic system
What is Gross Domestic Product?
Total value of all goods and services produced within a given period by a national economy through domestic factors of production
What is Gross National Product?
Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
What is GDP per capita?
Gross domestic product per person
What is real GDP?
GDP calculated to account for changes in currency values and price changes
What is nominal GDP?
GDP measured in current dollars or with all components valued at current prices
What was Canada’s GDP in 2012?
1.7 trillion
What was the global GDP in 2012?
69 trillion
What were the five top countries in terms of GDP in 2012?
US, China, Japan, Germany, and France
What happens if GDP rises?
A nation experiences economic growth
Why is GDP a key measure of economic growth?
It tracks an economy’s performance over time
What is the Genuine Progress Indicator?
A measure of GDP proposed by an organization called Redefining Progress that treats activities that harm the environment or our quality of life as costs and gives them negative values
What is a real growth rate?
The real growth rate of GDP adjusts for inflation and changes in currency
What does growth depend upon?
Output increasing at a faster rate than population: if the growth rate of GDP exceeds the rate of population growth, then our standard of living should be improving
What is purchasing power parity?
The principle that exchange rates are set so that the prices of similar products in different countries are about the same
What is productivity?
A measure of economic growth that compares how much a system produces with the resources needed to produce it
What happens to your standard of living if the economic system increases its productivity?
The standard of living improves
What is balance of trade?
The total of a country’s exports minus its imports
What is national debt?
The total amount of money that a country owes to creditors
What are budget deficits?
The result of the government spending more in one year than it takes in during that year
What is the goal of an economic system?
Stability
What is stability?
A condition in an economic system in which the amount of money available and the quantity of goods and services produced are growing at about the same rate
What in inflation?
Occurrence of widespread price increases throughout an economic system
What is the Consumer Price Index?
A measure of the prices of typical products purchased by consumers living in urban area
What is deflation?
A period of generally falling prices
What is unemployment?
The level of joblessness among people actively seeking work in an economic system
What are fiscal policies?
Policies whereby governments collect and spend revenues
What are monetary policies?
Policies whereby the government controls the size of the nation’s money supply (through interest)
