Topic 1 (Ch. 1-2)

Question 1

Define business

Answer 1

Any activity that seeks to provide goods and services to others, while operating at a profit

Question 2

Define goods

Answer 2

Tangible products, such as computers, food, clothing, cars and appliances

Question 3

Define services

Answer 3

Intangible products, such as education, healthcare, insurance, recreation, etc.

Question 4

Define entrepreneur

Answer 4

A person who risks time and money to start and manage a business

Question 5

Define revenue

Answer 5

The total amount of money, a business takes, and during a given period by selling goods and services

Question 6

Define profit

Answer 6

The amount of money a business earns above and beyond what it spends for salaries and other expenses

Question 7

Standard of living

Answer 7

The amount of goods and services people can buy with the money they have

Question 8

Quality of life

Answer 8

The general well-being of a society in terms of its political freedom, natural environment, education, healthcare, safety, etc.

Question 9

Define stakeholders

Answer 9

All of the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address

Question 10

Factors of production

Answer 10

The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge

Question 11

Examples of business environment

Answer 11

Economic and legal environment, technological environment, competitive environment, the social environment, and the global business environment

Question 12

Define productivity

Answer 12

The amount of output you generate given the amount of input

Question 13

Define e-commerce

Answer 13

The buying and selling of goods over the Internet

Question 14

Define empowerment

Answer 14

Giving Frontline workers a responsibility, authority, freedom, training, and equipment. They need to respond quickly to customer requests

Question 15

Define demography

Answer 15

The statistical study of the human population with regard to size density, and other characteristics, such as age, race, gender, and income

Question 16

Define economics

Answer 16

The study of how society chooses to employ resources to produce goods and services, and distribute them for consumption among various competing groups and individuals

Question 17

Macro economics

Answer 17

The part of economics study that looks at the operation of a nations economy as a whole

Question 18

Micro economics

Answer 18

The part of economic study that looks at the behavior of people and organizations in particular markets

Question 19

Invisible hand

Answer 19

A phrase coined by Adam Smith to describe the process that turns self-directed getting into social and economic benefits for all

Question 20

Define capitalism

Answer 20

An economic system, in which all are most of the factors of production and distribution are privately owned and operated for profit

Question 21

State capitalism

Answer 21

A combination of freer markets, and some government control

Question 22

Define supply

Answer 22

The quantity of products that manufactures or owners are willing to sell a different prices at a specific time

Question 23

Demand

Answer 23

The quantity of products that people are willing to buy

Question 24

Market price

Answer 24

The price determined by supply and demand

Question 25

Define perfect competition

Answer 25

The degree of competition in which there are many sellers in America, and none is large enough to dictate the price of a product

Question 26

Monopolistic competition

Answer 26

The degree of competition in which a large number of sellers produce very similar products. That buyer’s nevertheless perceive is different.

Question 27

Oligopoly

Answer 27

A degree of competition, which just a few sellers dominate the market

Question 28

Monopoly

Answer 28

A degree of competition, which only one seller controls the total supply of a product or service and sets the price

Question 29

Define Socialism

Answer 29

An economic system, based on the premise that some, if not most basic businesses should be owned by the government, so that profits can be more evenly distributed among the people

Question 30

Brain drain

Answer 30

The last of the best and brightest people to other countries

Question 31

Define communism

Answer 31

An economic and political system, in which the government makes almost all economic decisions, and owns almost all the major factors of production

Question 32

Free market economies

Answer 32

Economic systems, in which the market marginally determines what goods and services get produced who gets them, and how the economy grows (capitalism)

Question 33

Command economies

Answer 33

Economic systems, in which the government largely decides what goods and services will be produced who will get them, and how the economy will grow (socialism and communism)

Question 34

Mixed economies

Answer 34

Systems in which some allocation of resources is made by the market and some by the government

Question 35

Gross domestic product

Answer 35

The total value of final goods and services produced in a country in a given year

Question 36

Gross output

Answer 36

A measure of total sales volume at all stages of production

Question 37

Unemployment rate

Answer 37

The number of civilians, at least 16 years old, who are unemployed and tried to find a job within the prior four weeks

Question 38

Four types of unemployment

Answer 38

Frictional unemployment, structural unemployment, cyclical, unemployment, and seasonal unemployment

Question 39

Inflation

Answer 39

A general rise in the process of goods and services over time

Question 40

Disinflation

Answer 40

A situation in which price increases are slowing

Question 41

Deflation

Answer 41

A situation in which prices are declining

Question 42

Stagflation

Answer 42

A situation when the economy is slowing, but prices are going up anyhow

Question 43

Consumer price index (CPI)

Answer 43

Monthly statistics that measure the pace of inflation or deflation

Question 44

Core inflation

Answer 44

CPI minus food and energy costs

Question 45

Producer price index (PPI)

Answer 45

Index that measures the change in prices at the wholesale level

Question 46

Recession

Answer 46

Two or more consecutive quarters of decline in the GDP

Question 47

Depression

Answer 47

A severe recession usually with deflation

Question 48

Fiscal policy

Answer 48

The federal government efforts to keep the economy stable by increasing or decreasing taxes, are government spending

Question 49

Keynesian economic theory

Answer 49

The theory that a government policy of increasing spending and cutting taxes, could stimulate the economy in a recession

Question 50

Monetary policy

Answer 50

The management of the money supply in interest rates by the federal reserve bank