Term
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Definition
| It is best defined as a group of firms that produce identical or similar products. |
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Term
| What best illustrates a virtically intergrated firm? |
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Definition
| A group of plants that is owned and operated by a single firm and that consists of oil fields, refineries, and gasoline stations. |
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Term
| Why does the corporate form of business enterprise promote the development of large-scale business operations? |
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Definition
| They do this because corporations have been able to marshal(arrange) large amounts of finical capital through the sale of stocks and bonds. |
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Term
| What does limited liability mean? |
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Definition
| means that corporate creditors have no legal claim on personal assets of a corporate stockholder. |
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Term
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Definition
| They are shares of ownership of a corporation. |
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Term
| What are corporate bonds? |
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Definition
| They are promises by a corporation to repay money the bond holder has loaned to the corporation. |
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Term
| Government may lessen income inequality when? |
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Definition
- providing transfer payments to the poor
- directly modifying market prices, for example by establishing a legal minimum
-using the tax system to tax the wealthy realitbely more heavily than the poor |
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Term
| What happens if the costs associated with negative externalities(spillover costs) are not internalized by the producer? |
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Definition
| The equilibrium output will exceed the most efficient output. |
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Term
| What does a market externality refer too? |
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Definition
| It refers to economic costs and benefits of market activities that go to those who are not directly involved in the market transaction. |
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Term
| In terms of absolute volumes of imports and exports the worlds leading trading nation is who? |
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Definition
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Term
| What are import quotas meant to do? |
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Definition
| They are meant to deter(discourage) free trade. |
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Term
| China has recently emerged as what? |
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Definition
| One of the worlds top trading nations in terms of total trade volume. |
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Term
| Exchange rates are particularly important why? |
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Definition
| Because they link the price levels or various nations to one another. |
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Term
| A change in the dollar price of yen from $1=100 yen to $1=50 yen will what? |
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Definition
| Increase U.S. exports and depress Japanese exports. (dollar value decreased) |
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Term
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Definition
| It is the equalibrium price in a foriegn exchange market. |
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Term
| What is a sole proprietorship? |
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Definition
| It is an unincorporated business owned by one individual. |
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Term
| When is a partnership formed? |
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Definition
| When two or more indivuals own and operate an unicorporated business under a partnership agreement. |
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Term
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Definition
| It is a legal entity in and of itself and is distinct from its individual owners (stock holders). |
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Term
| What is the difference between a sole proprietorship, a partner ship and a corporation, and what are these all examples of? |
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Definition
Sole proprietorship= owned by 1 person
Partnership= owned by 2 or more people under an agreement
Corporation= owned by stockholders
;Types of business's |
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Term
| Yesterday's $1 would buy 800 south korean won, but today $1 will only buy 790 won, what has happened? |
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Definition
| The dollar has depreciated in value. |
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Term
| Who hears and rules on trade disputes between nations? |
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Definition
| The World Trade Organization (WTO). |
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Term
| What is nations gross domestic product (GDP)? |
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Definition
| It is the dollar value of the total output produced within the borders of that nation, in a given year. |
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Term
| What would happen if intermediate goods and services were included in the GDP? |
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Definition
| The GDP would be overstated. |
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Term
| In national income accounting Consumption expenditures include what? |
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Definition
| Consumer durable goods, Consumer non-durable goods, and services. |
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Term
| When are net exports negative? |
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Definition
| When a nations imports exceed its exports. |
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Term
| As defined in national income accounting, investment includes such things as what? |
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Definition
| It includes things like business expenditures on machinery and equipment. |
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Term
| In calculating GDP what is not counted? |
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Definition
| Governmental transfer payerments such as social security or unemployment compensation. |
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Term
| An economy's production capacity is expanding when? |
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Definition
| When domestic investments exceeds depreciation. |
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Term
| what does the real GDP refer to? |
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Definition
| It refers to GDP data that have been adjusted for changes in the price level. |
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Term
| Suppose that inventories were $40 billion in 2003(at the end of the year) and $50 billion in 2004(at the end of the year). In 2004, national income accounts would be what? |
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Definition
| Add $10 billion to other elements of investment in calculating total investment |
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Term
| For a nations real GDP per capita to rise during a year what must happen? |
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Definition
| the real GDP must increase more rapidly than population. |
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Term
| The number of years required for real GDP to double can be found by? |
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Definition
| dividing 70 by the annual growth rate |
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Term
| The United States' economy is considered to be at full empolymnet when? |
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Definition
| When 4-5 percent of the labor force is unempolyed (at the natural rae of unemployment). |
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Term
| Kimberly Voluntarily quit her job as an insurance agent to return to school full-time to earn a MBA degree. With degree in hand she is now searching for a position in management Kimberly is presently what? |
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Definition
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Term
| The aggregate cost of unemployment can be measured by the amount of what? |
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Definition
| By the amount by which potential GDP exceeds actual GDP. |
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Term
| When does Demand-Pull inflation occur? |
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Definition
| It occurs when total spending exceeds the economy's ability to provide output at the existing price level. |
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Term
| Inflation initiated by increases in wages or other resource prices is labeled as what? |
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Definition
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Term
| The industries or sectors of the economy in which output is most likely to be reduced by the recession phase of the business cycle is in the area or what? |
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Definition
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Term
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Definition
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Term
| Explain the two causes of market failures. |
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Definition
Demand-side: market failures occur when demand curves do not reflect the consumers full willingness to pay.
*people enjoy fireworks therefore be willing to pay but because such displays are outdoors people don't actually have to pay for them because there is no way to exclude those who haven't paid from also enjoying the show.
Supply-side: market failures occur when supply curves do not reflect all production costs, including those that may be borne by third parties.
* A firm running a power-plant will have to pay for all of the land, labor, capital, and entrepreneurship, however they don't pay for the pollution problems the plant imposes on the environment and other people
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Term
| How do you calculate gross domestic product (GDP)? |
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Definition
By adding personal consumption expenditures(C)+ gross private domestic investment (Ig)+ Government purchases (G)+ net exports (Xn)
C+Ig+G+Xn=GDP |
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Term
| How do you calculate Net Domestic Product (NDP)? |
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Definition
Gross domestic product (GDP) - consumption of fixed capital(depreciation)
*NDP = GDP- consumption of fixed capital |
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Term
| How do you calculate National Income (NI)? |
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Definition
National Income= Net Domestic Product - Indirect Business Tax (statistical discrepancy) - Net foreign factor income
*NI= NDP- indirect biz tax- Net foreign income |
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Term
How do you calculate Personal Income (PI)?
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Definition
| PI= Social Security - Corporate Income Tax- Undistributed Corporate Profit + Government Transfer Payment |
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Term
| How do you calculate Disposable Income (DI)? |
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Definition
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