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2012-04-04 15:04:23

key terms from chapter two - Nickels, W.G., 2010. Understanding Business. McGraw-Hill Companies, Inc: New York. ed9, p. 28-57.
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  1. Define: economics
    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 (p. 30)
  2. Define: macroeconomies
    the part of economics study that looks at the operation of a nation's economy as a whole (p. 30)
  3. Define: microeconomics
    the part of economics study that looks at the behavior of people and organizations in particular markets (p. 30)
  4. Define: resource development
    the study of how to increase resources and to create the conditions that will make better use if those resources (p. 31)
  5. Define: invisible hand
    a phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all (p. 33)
  6. Define: capitalism
    an economic system in which all or most of the factors if production and distribution are privately owned and operated for profit (p. 35)
  7. Define: supply
    the quantity of products that manufacturers or owner are willing to sell at different prices at a specific time (p. 37)
  8. Define: demand
    the quantity of products that people are willing to buy at different prices at a specific time (p. 37)
  9. Define: market price
    the price determined by supply and demand (p. 39)
  10. Define: perfect competition
    the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of the product (p. 39)
  11. Define: monopolistic competition
    the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different (p. 39)
  12. Define: oligoply
    a degree of competition in which just a few sellers dominate the market (p. 39)
  13. Define: monopoly
    a degree if competition in which only one seller controls the total supply of a product or service, and sets the price (p. 39)
  14. Define: socialism
    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 (p. 40)
  15. Define: brain drain
    the loss of the best and brightest people to other countries (p. 41)
  16. Define: communism
    an economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production (p. 41)
  17. Define: free-market economies
    economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows (p. 42)
  18. Define: command economies
    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 (p. 42)
  19. Define: mixed economies
    economic systems in which some allocation of resources is made by the market and some by the government (p. 43)
  20. Define: gross domestic product (GDP)
    the total value of final goods and services produced in a country in a given years (p. 45)
  21. Define: unemployment rate
    the number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks (p. 46)
  22. Define: inflation
    a general rise in the prices of goods and services over time (p. 47)
  23. Define: disinflation
    a situation in which price increases are slowing (the inflation rate is declining) (p. 47)
  24. Define: deflation
    a situation in which prices are declining (p. 47)
  25. Define: stagflation
    a situation when the economy is slowing but prices are going up anyhow (p. 47)
  26. Define: consumer price index (CPI)
    monthly statistics that measure the pace of inflation or deflation (p. 47)
  27. Define: producer price index (PPI)
    an index that measures prices at the wholesale level (p. 48)
  28. Define: business cycles
    the periodic rise and falls that occur in economies over time (p. 48)
  29. Define: recession
    two or more consecutive quarters of decline in the GDP (p. 48)
  30. Define: depression
    a severe recession, usually accompanied by deflation (p. 49)
  31. Define: fiscal policy
    the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending (p. 49)
  32. Define: national debt
    the sum of government deficits over time (p. 49)
  33. Define: Keynesian economic theory
    The theory that a government policy if increasing spending and cutting taxes could stimulate the economy in a recession (p. 50)
  34. Define: monetary policy
    The management of the money supply and interest rates by the Federal Reserve Bank (p. 51)