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Business Ch.2
Ch. 2 terms and things to know
41
Business
Undergraduate 1
11/02/2015

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Term
Economics
Definition
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
Term
Macroeconomics
Definition
The part of economics study that looks at the operation of a nation's economy as a whole
Term
Microeconomics
Definition
The part of economics study that looks at hte behavior of people and organizations in particular markets
Term
Resource Development
Definition
The study of how to increase resources and to create the conditions that will make better use of those resources
Term
Invisible Hand
Definition
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.
Term
neo-Malthusians
Definition
People who follow the idea of Economist Thomas Malthus. The idea was that evetually there will be too many peopel and too little to sustain them
Term
Capitalism
Definition
An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
Term
State Capitalism
Definition
A combination of freer markets and some government control.
Term
The Foundations of Capitalism
Definition

1. The right to own private property

2. The right to own a business and keep all that business's profits

3. The right to freedom of competition.

4. The right to freedom of choice.

Term
Free Market
Definition
The buyers and the sellers make the decisions regarding how the market is run
Term
Supply
Definition
The quanitity of products that manufacturers of owners are willing to sell at different prices at a specific time.
Term
Demand
Definition
The quantity of products that peopel are willing to buy at different prices at a specific time
Term
Market Price
Definition
The price determined by supply and demand
Term
Equilibrium Price/Point
Definition
When comparing prices of customer demand and retailer demand, the two will eventually meet somewhere.
Term
Perfect Competition
Definition
One of the four different degress of competition, perfect competition is the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.
Term
Monopolistic Competition
Definition
One of the four different degrees of competition, monopolistic competition is the degreee of competition in which a large number of sellers produce very similar products tht buyers nevertheless perceive as different.
Term
Oligopoly
Definition
One of the four degrees of competition, oligopoly is a degree of competition in which just a few sellers dominate the market.
Term
Monopoly
Definition
One of the four degrees of competition, monopoly is the degree in which only one seller controls the total supply of a product or service, and sets the price.
Term
Socialism
Definition
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.
Term
Brain Drain
Definition
Losing the best and brightest people to other countries.
Term
Communism
Definition
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.
Term
Free-Market Economics
Definition
Economic systems in which the market largely detemines what goods and services get produced, who gets them, and how the economy grows.
Term
Command economics
Definition
Economic systems in which the government largely decides what goods and servies will be produced, who will get them, and how teh economy will grow.
Term
Mixed Economies
Definition
Economic systems in which some allocation of resources is made by the market and some by the government.
Term
Gross Domestic Product (GDP)
Definition
The total value of final goods and services produced in a country in a given year.
Term
Gross Output (GO)
Definition
A measure of total sales volume at all stages of production.
Term
The Unemployment Rate
Definition
The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
Term
Four Types of Unemployment
Definition

1. Frictional

2. Structural

3. Cyclical

4. Seasonal

Term

Inflation

Definition
The general rise in the prices of goods and services over time.
Term
Disinflation
Definition
A situation in which prices increases are slowing (the inflation rate is declining).
Term
Deflation
Definition
A situation in which prices are declining.
Term
Stagflation
Definition
A situation when the economy is slowing but prices are going up anyhow.
Term
Consumer Price Index (CPI)
Definition
Monthly statistics that measure the pace of inflation or deflation.
Term
Core inflation
Definition
CPI minus food and energy costs.
Term
Producer Price Index (PPI)
Definition
An index that measures prices at the wholesale level.
Term
Recession
Definition
Two or more consecutive quarters of decline the GDP
Term
Depression
Definition
A severe recession, usaully accompanied by deflation
Term
Fiscal Policy
Definition
The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.
Term
National Debt
Definition
The sum of governemnt deficits over time.
Term
Keynesian Economic Theory
Definition
The theory that a government policy of increasing spending could stimulte the economy in a recession.
Term
Monetary Policy
Definition
The management of the money supply and interest rates by the Federal Reserve.
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