Card Set Information
Chapter 2 of business book
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.
looks at operation of a nation's economy as a whole
looks at behavior of people and organizations in markets for particular products or services
the study of how to increase resources and create conditions that will make better use of them
used to describe the process that turns self-directed gain into social and economic benefits for all.
all or most of the factors of production and distribution are owned by individuals
four basic rights under free-market capitalism
1. own private property
2. own business and keep all that business's profits
3. freedom of competition
4. freedom of choice
the quantities of products manufacturers or owners are willing to sell at different prices at a specific time
the quantity of products that people are wiling to buy at different prices at a specific time
determined by supply and demand; price toward which the market will trend
exists when there are many sellers in a market and none is large enough to dictate the price of a product
a large number of sellers produce very similar products that buyers nevertheless perceive as different
degree of competition in which just a few sellers dominate a market
when one seller controls the total supply of a product or service, and sets the price
economic system based on premise that some basic businesses should be owned by the government so that profits can be more evenly distributed among the people
the loss of the best and brightest people to other countries
economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
exist when the market largely determines what goods and services get produced, who gets them, and how the economy grows (
exist where some allocation of resources is made by the market and some by the government
the total value of final goods and services produced in a country in a given year.
gross domestic product (GDP)
percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
general rise in the prices of goods and services over time.
when the price increases are slowing (inflation rate is declining)
prices are declining
when the economy is slowing but prices are going up anyhow
consists of monthly statistics that measure the pace of inflation or deflation
consumer price index (CPI)
measures prices at the wholesale level
producer price index (PPI)
the periodic rises and falls that occur in economies over time
two or more consecutive quarters of decline in the GDP
severe recession, usually accompanied by deflation
the sum of government deficits over time.
a government policy of increasing spending and cutting taxes could stimulate the economy in a recession
keynesian economic theory
the management of the money supply and interest rates by the Federal Reserve Bank
federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending
economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy grows.