Week 2 Ch. 2: Economics, Accounting and Organizations

Question 1

Economy

Answer 1

the sum total of all the economic activity within a given region

Question 2

Economics

Answer 2

the study of how a society uses its scarce resources to produce and distribute goods and services

Question 3

Microeconomics

Answer 3

the study of how consumers, businesses, and industries collectively determine the quantity of goods and services demanded and supplied at different prices

Question 4

Macroeconomics

Answer 4

the study of “big picture”issues in an economy, including competitive behaviour among firms, the effect of government policies, and overall resource allocation issues

Question 5

Factors of Production

Answer 5

• Natural resources
• Human resources
• Capital
• Entrepreneurship
• Knowledge

Question 6

Natural resources

Answer 6

land, forests, minerals, water, and other tangible assets usable in their natural state

Question 7

Human resources

Answer 7

all the people who work in an organization or on its behalf

Question 8

Capital

Answer 8

the funds that finance the operations of a business as well as the physical, human-made elements used to produce goods and services

ex. factories and computers

Question 9

Entrepreneurship

Answer 9

the combination of innovation, initiative, and willingness to take the risks required to create and operate new businesses

Question 10

Knowledge

Answer 10

expertise gained through experience or association

Question 11

Scarcity

Answer 11

a condition of any productive resource that has finite supply

Question 12

Opportunity cost

Answer 12

the value of the most appealing alternative not chosen

Question 13

Economic indicators

Answer 13

• statistics that measure the performance of the economy
• leading and lagging

Question 14

Key Economic Indicators

Answer 14

• Housing starts
• Durable-goods orders
• Price indexes
• Unemployment rate
• Gross domestic product (GDP)

Question 15

Planned system

Answer 15

economic system in which the government controls most of the factors of production and regulates their allocation

Question 16

Free-market system

Answer 16

an economic system in which decisions about what to produce and in what quantities are decided by the market’s buyers and sellers

Question 17

Capitalism

Answer 17

economic system based on economic freedom and competition

Question 17

Capitalism

Answer 17

economic system based on economic freedom and competition

Question 18

Nationalization

Answer 18

a government’s takeover of selected companies or industries

Question 19

Privatization

Answer 19

turning over services once performed by the government and allowing private businesses to perform them instead

Question 20

Regulation

Answer 20

relying more on laws and policies than on market forces to govern economic activity

Question 21

Deregulation

Answer 21

removing regulations to allow the market to prevent excesses and correct itself over time

Question 22

Monetary policy

Answer 22

government policy and actions taken by the Federal Reserve Board to regulate the nation’s money supply

Question 23

Fiscal policy

Answer 23

strategy for the use of government revenue collection and spending to influence the business cycle

Question 24

Demand

Answer 24

buyers’ willingness and ability to purchase products at various price points

Question 25

Supply

Answer 25

a specific quantity of a product that the seller is able and willing to provide at various prices

Question 26

Demand curve

Answer 26

a graph of the quantities of a product that buyers will purchase at various prices

Question 27

Supply curve

Answer 27

a graph of the quantities of a product that sellers will offer for sale, regardless of demand, at various prices

Question 28

Equilibrium price

Answer 28

• the point at which quantity supplied equals quantity demanded
• bc the supply and demand curves are dynamic, so is the equilibrium point
• as variables affecting supply and demand change, so will the equilibrium price

Question 29

Competition

Answer 29

rivalry among businesses for the same customers

Question 30

Pure competition

Answer 30

a situation in which so many buyers and sellers exist that no single buyer or seller can individually influence market prices

Question 31

What Businesses are Affect by

Answer 31

• Inflation
• Unemployment rate

Question 32

Inflation

Answer 32

an economic condition in which prices rise steadily throughout the economy

Question 33

Unemployment rate

Answer 33

the portion of the labor force (everyone over 16 who has or is looking for a job) currently without a job

Question 34

Money

Answer 34

• anything generally accepted as a means of paying for goods and services
• serves as a medium of exchange, a unit of accounting, a store of value, and a standard of deferred value

Question 35

Canada

Answer 35

the overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or “overnight”) funds among themselves

Question 36

Discount rate

Answer 36

the interest rate that member banks pay when they borrow funds from the Central bank

Question 37

Prime rate

Answer 37

the interest rate a bank charges its best loan customers

Question 38

Investment banks

Answer 38

firms that offer a variety of services related to initial public stock offerings, mergers and acquisitions, and other investment matters

Question 39

Commercial banks

Answer 39

financial institutions that accept deposits, offer various types of checking and savings accounts, and provide loans