Card Set Information
This is Chapter 2 Understanding Basic Economics.
What is economy?
The sum total of all the economic activity within a given region.
What are economics?
The study of how a society uses its scarce resources to produce and distribute goods and services
What is microeconomics?
The study of how consumers, busineses, and industries collectively determine the quantity of goods and services demanded and supplied at different prices.
What is macroeconomics?
The study of big picture" issues in an economy, including competitive behavior among firms, the effect of government polices, and overall resource allocation issues.
What are natural resources?
Land, forests, minerals, water and other tangible assets usable in their natural state.
What are human resources?
All the people who work in an organization or on its behalf.
What is capital?
The funds that finance the operations of a business as well as the physical, human-made elements used to produce goods and services, such as factories and computers.
What is entrepreneurship?
The combination of innovation, initiative, and willingness to take the risks required to create and operate new businesses.
What is knowledge?
Expertise gained through experience or association.
What is opportunity cost?
The value of the most appealing alternative not chosen.
What is economic system?
The policies that define a society's particular economic structure; the rules by which a society allocates economic resources.
What is a free-market system?
Economic system in whcih decisions about what to produce and in what quantities are decided by the market's buyers and sellers.
What is capitalism?
Economic system based on economic freedom and competition.
What is a planned system?
Economic system in which the government controls most of the factors of production and regulates their allocation.
What is socialism?
Economic system characterized by public ownership and operation of key industries combined with private ownership and operation of less-vital industries.
What is nationalizing?
A government's takeover of selected companies or industries.
What is privatizing?
Turning over services once performed by the government and allowing private businesses to perform them instead.
What is demand?
Buyer's willingless and ability to purchase products at various price points.
What is supply?
A specific quantity of a product that the seller is able and willing to provide at various prices.
What is demand curve?
A graph of the quantities of a product that buyers will purchase at various prices.
What is supply curve?
A graph of the quantities of a product that sellers will offer for sale, regardless of demand, at various prices.
What is equilibrium point?
The point at which quantity supplied equals quantity demanded.
What is competition?
Rivalry among businesses for the same customers?
What is pure competition?
A situation in which so many buyers and sellers exist that no single buyer or seller can individually influence market prices.
What is monopoly?
A situation in which one company dominates a market to the degree that it can control prices.
What is monopolistic competition?
A situation in which many sellers differentiate their products from those of competitors in at least some small way.
What is oligopoly?
A market situation in which a very small number of suppliers, sometimes only two, provide a particular good or service.
What is recession?
A period during which national income, employment, and production all fall; defined as at least six months of decline in the GDP.
What are business cycles?
Fluctuations in the rate of growth that an economy experiences over a period of several years.
What is an unemployment rate?
The portion of the labor force (everyone over 16 who has or is looking for a job) currently without a job.
What is inflation?
An economic condition in which prices rise steadily throughout the economy.
What is deflation?
An economic condition in which prices fall steadily throughout the economy.
What is regulation?
Relying more on laws and policies than on market forces to govern economic activity.
What is deregulation?
Removing regulations to allow the market to prevent excesses and correct itself over time.
What is monetary policy?
Government policy and actdions taken by the Federal Reserve Board to regulate the nation's money supply.
What is fiscal policy?
Use of government revenue collection and spending to influence the business cycles.
What is economic indicators?
Statistics that measure the performance of the economy.
What is consumer price index (CPI)?
A montly statistic that measures changes in the prices of a representative collective of consumer goods and services.
What is producer price index (PPI)?
A statistical measure of price trends at the producer and wholesaler levels?
What is gross domestic product (GDP)?
The value of all the final goods and services produced by businesses located within a nation's borders; excludes outputs from overseas operations of domestic companies.