Mgmt 425 E2 Chapter 4

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jessenliz2010
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299538
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Mgmt 425 E2 Chapter 4
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2015-03-31 16:25:33
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Mgmt 425
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Mgmt 425
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425 E2
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  1. How does political ideology influence economic systems?
    • group welfare
    • individual well-being
    • ownership of factors of production (land, labor, capital)
  2. favors group welfare over individual well-being; government owns factors of production
    communism (centrally planned economy)
  3. ownership of factors of production is split between public and private sectors depending on social, political, and/or economic objectives
    socialism (mixed economy)
  4. individual well-being will achieve group welfare; ownership of factors of production should be majorly owned by individuals with some owned by the government
    capitalism (free market economy)
  5. move of socialism away from its more communist beliefs more toward free market economic beliefs
    privatization
  6. What are the means to measure economic development?
    • GDP
    • GNP
    • PPP
    • HDI
  7. What is the classical view of economic development?
    focuses on a healthy increase of GDP per capita from year to year
  8. What is the modern view of economic development?
    a complex process of positive advances/changes in all sectors of life in an economy
  9. Why is GDP not an accurate measurement of economic development?
    • uncounted transactions (cash, black market, etc)
    • question of growth
    • problem of average
    • pitfalls of comparison
  10. an adjustment in GDP per capita to reflect difference in the cost of living between different countries
    PPP
  11. measurement of the extent of a government to provide health, education, and standard of living
    HDI
  12. What are the categories for a country based on economic development?
    • developed countries
    • newly industrialized countries (NICs)
    • developing countries
  13. What are the characteristics of developing countries?
    • GDP/capita of less than $6,000
    • unequal distribution of income
    • technological dualism (haves and have nots)
    • regional dualism (haves and have nots)
    • majority of population works in agricultural sector (low income)
    • disguised unemployment (a job for one is split for many)
    • high population growth rate
    • high rates of illiteracy, child mortality
    • widespread malnutrition and health problems
    • political instability
    • inhospitable topography
    • export economy in minerals and agriculture
    • poor infrastructure
    • low savings rates and inadequate financial infrastructure
  14. What is the classical theory of economic development?
    • economic growth (GDP) achieves economic development
    • investments in capital assets
    • balanced economic growth
    • import substitution (domestic manufacturing)
  15. What is the modern theory of economic development?
    • complex change processes in all aspects of life
    • investments in human assets (education and health)
    • trickle-down growth (success of one aspect brought together the other sectors; almost domino effect)
    • export promotion (produce quality products at competitive prices so that we earn money)
  16. national _____ can have a strong impact on a nation's economic development and vice versa
    culture
  17. The economy of _____ cultures tend to provide incentive and rewards for an individual's business initiative
    individualist
  18. The economy in ____ cultures tend to offer fewer incentives and rewards
    collectivism
  19. ____ is the structure and processes that a country uses to allocate its resources and conduct its commercial activities
    economic system
  20. No nation is completely individualist or collectivist in its _______.
    cultural orientation
  21. ____ is a system in which a nation's land, factories, and other economic resources are owned by the government
    centrally planned economy
  22. ______ agencies specify production goals for factories and even decide prices
    central planning agencies
  23. What is the ultimate goal of a centrally planned economy?
    to achieve a wide range of political, social, and economic objectives through production and distribution of resources
  24. Central planning is rooted inn the ideology that the ____ is more important than _____. (Karl Marx)
    • group's welfare
    • individual well-being
  25. In the late 80s, centrally planned economy became unpopular for several reasons such as failure to create ____, _____, _____, & _______.
    • economic value
    • incentives
    • rapid growth
    • satisfying consumer needs
  26. Centrally planned economies failed because they hampered the _____ and ____ of products, failed to encourage thinking that promotes _____, _____, and _____.
    • quality
    • economic value
    • the development of new technologies
    • products
    • production methods
  27. What about China, an emerging market, is attracting huge sums of investments?
    • the immense population
    • rising incomes
    • expanding opportunities
  28. ______ were larger entities responsible for planning agricultural production quotas and industrial production schedules
    communes
  29. ______ is now an accepted concept which encourage Chinese companies to invest in innovation.
    private property
  30. a term referring to "personal relationships"; one of the most important factors in forming a successful venture in China
    guanxi
  31. What does guanxi entail?
    • contacts > contracts
    • pleasure > business
    • business partners = family members too
    • cultural sensitivity matters
  32. ____ and _____ pose threats to China's future economic performance
    • political problems
    • social problems
  33. Intensified competition and the entry of international companies into China are placing greater emphasis on ____ and the cutting of ______.
    • efficiency
    • payrolls in some industries
  34. Unhappiness with economic progress in the countryside is a serious potential source of _____
    social unrest
  35. ____ is a system in which land, factories, and other economic resources are rather equally split between private and government ownership
    mixed economy
  36. In a mixed economy, the government tends to control the economic sectors that it considers important to _____ & _______
    • national security
    • long-term stability
  37. Many mixed economies maintain generous welfare systems to support ____ and provide _____
    • unemployed
    • healthcare for the general population
  38. The governments of countries with mixed economies influence economic activity by _____ like ______.
    • special incentives
    • hefty subsidies
  39. What is the goal of a mixed economy?
    • low unemployment
    • low poverty
    • steady economic growth
    • equitable distribution of wealth by means of most effective policies
  40. Many mixed economies are remodeling to look more like _______
    free market economies
  41. Many government owned businesses in mixed economies need _____ to survive which raises _______ and _____ for goods and services
    • large infusions of taxpayer money
    • taxes & prices
  42. the selling of government owned economic resources to private operators is called _______; what does it help eliminate?
    • privatization
    • subsidized materials, labor, and capital
  43. What is the overall aim of privatization?
    • to increase economic efficiency
    • boost productivity
    • raise living standards
  44. In a ____ the majority of a nation's land, factories, and other economic resources are privately owned by individuals or businesses
    free market economy
  45. Who produces what and the prices of products, labor, and capital in a market economy are determined by two factors
    supply and demand
  46. the quantity of a good or service that produces are willing to provide at a specific selling price
    supply
  47. the quantity of a good or service that buyers are willing to purchase at a specific selling price
    demand
  48. As supply and demand change to a good or service so does its ______
    selling price
  49. The ____ a product's price, the greater the demand will be; the ____ the product's price, the lower its demand.
    • lower
    • higher
  50. The lower a product's price the _____ the quantity that producers will supply; the higher the price, the _____ the quantity.
    • smaller
    • greater
  51. What are two forces that can affect prices for many products?
    • market forces
    • uncontrollable natural forces
  52. What is the overall belief of the free market system?
    Individual concerns should be placed above group concerns
  53. structure an processes that a country uses to allocate its resources and conduct its commercial activities
    economic system
  54. economic system in which a nation's land, factories, and other economic resources are owned by the government, which plans nearly all economic activity
    centrally planned economy
  55. economic system in which land, factories, and other economic resources are rather equally split between private and government ownership
    mixed economy
  56. policy of selling government-owned economic resources to private operators
    privatization
  57. economic system in which the majority of a nation's land, factories, and other economic resources are privately owned either by individuals or businesses
    market economy
  58. quantity of a good or service that producers are willing to provide at a specific selling price
    supply
  59. quantity of a good or service that buyers are willing to purchase at a specific price
    demand
  60. Who is the Father of Capitalism?
    Adam Smith
  61. What are the features of a free market economy?
    • free choice
    • free enterprise
    • price flexibility
  62. When a company is able to control a product's supply and therefore its price, it is considered a _____.
    monopoly
  63. How do governments prevent monopolies?
    Enforcing antitrust laws
  64. What are the roles of the government in a free market economy?
    • enforcing antitrust laws
    • preserving property rights
    • providing a stable fiscal and monetary environment
    • preserving political stability
  65. Countries with the greatest economic freedom tend to have the ______ standards of living; but greater economic freedom does not guarantee a high per capita income.
    highest
  66. measure for gauging the economic well-being of one nation's people as compared with that of another nation's people
    economic development
  67. _____ is a key factor that drives economic growth and rising living standards.
    productivity
  68. What are some activities that are not included in a nation's GDP?
    • volunteer work
    • unpaid household work
    • illegal activities (gambling, black market)
    • unreported transactions conducted in cash
  69. value of goods and services that can be purchased with one unit of a country's currency
    purchasing power
  70. relative ability of two countries' currencies to buy the same "basket" of goods in those two countries
    purchasing power parity (PPP)
  71. measure of the extent to which a government equitably provides its people with a long and healthy life, and education, and a decent standard of living.
    human development index (HDI)
  72. country that is highly industrialized and highly efficient, and whose people enjoy a high quality of life
    developed country
  73. country that has recently increased the portion of its national production and exports derived from industrial operations
    newly industrialized country

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