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BTF > The economic environment of business and finance > Flashcards

The economic environment of business and finance Flashcards

1
Q

For inelastic products (PED < 1), how do you increase revenue?

A

Increase the price

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2
Q

For elastic products (PED > 1), how do you increase revenue?

A

Reduce the price

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3
Q

Example of Giffen good

A

bread

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4
Q

Example of Veblen good

A

Rolex

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5
Q

What are the four factors of production?

A

Land
Labour
Capital
Entrepreneurship

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6
Q

What is the return on land?

A

Rent

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7
Q

What is the return on labour?

A

Wages

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8
Q

What is the return on capital?

A

Interest

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9
Q

What is the return on entrepreneurship?

A

Profit

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10
Q

What are the four stages of the business/trade cycle?

A

Recession
Depression
Recovery
Boom

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11
Q

Growth during a recession?

A

Negative

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12
Q

Unemployment during a recession?

A

High and rising

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13
Q

Inflation during a recession?

A

Low

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14
Q

solutions for a recession?

A

Boost demand
Increase government spending
Decrease taxation
Cut interest rates to increase consumption

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15
Q

Growth during a depression?

A

Negative

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16
Q

Unemployment during a depression?

A

High and rising

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17
Q

Inflation during a depression?

A

Increasing

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18
Q

solutions for a depression?

A

boost supply
free up land
free up labour

19
Q

Growth during a recovery

A

starting to rise

20
Q

unemployment during recovery

A

falling

21
Q

inflation during recovery?

A

moderate

22
Q

solutions for recovery?

A

decrease government spending
increase taxation
raise interest rates

23
Q

growth during a boom?

A

high

24
Q

unemployment during a boom?

A

low

25
Q

inflation during a boom?

A

high and rising

26
Q

solution for a boom?

A

reduce demand
decrease government spending
increase taxation
raise interest rates

27
Q

What are the two types of inflation?

A

Cost-push

Demand-pull

28
Q

What are the two types of demand-pull inflation?

A

Fiscal

Credit

29
Q

what is fiscal demand pull inflation?

A

when an increase in government spending or reduction in taxes raises demand in the economy

30
Q

what is credit demand-pull inflation?

A

when levels of credit extended to customers increases, so expenditure rises

31
Q

What does monetary policy focus on?

A

Interest rates
Exchange rates
Money supply

32
Q

What does fiscal policy focus on?

A

Government spending
Taxation
Borrowing

33
Q

What is an expansionary fiscal stance?

A

Government spending > taxation

34
Q

What is a contractionary fiscal stance?

A

Government spending < taxation

35
Q

What is a neutral fiscal stance?

A

Government spending = taxation

36
Q

What are the four main types of market structure?

A

Perfect competition
Monopolistic competition
Oligopoly
Monopoly

37
Q

In what type of market structure:

is there a single selling price across the market?

A

Perfect competition

38
Q

In what type of market structure:

do suppliers make normal profits?

A

Perfect competition

Monopolistic competition

39
Q

In what type of market structure:

are there homogeneous products?

A

perfect competition

40
Q

In what type of market structure:

are there super normal profits?

A

Monopoly

41
Q

What are the four types of monopoly?

A

Pure
Actual
Government franchise
Natural

42
Q

In what type of market structure:

are there likely to be price wars?

A

Oligopolies

43
Q

In what type of market structure:

can there be collusion to form cartels?

A

Oligopolies

44
Q

What are the four types of market failure?

A

Market imperfections
Externalities
Public goods
Economies of scale

BTF (13 decks)

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