Intro To Business

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Economy

Back 1

A financial and social system of how resources flow through society, from production, to distribution, to consumption.

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Macroeconomics

Back 2

The study of a country's overall economic issues, such as the employment rate, the gross domestic product, and taxation policies.

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Microeconomics

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The study of smaller economic units such as individual consumers, families, and individual businesses.

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Economic System

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An economic system-also known as the private enterprise or free market system based on private ownership, economic freedom, and fair competition.

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Oligopoly

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A market structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are typically high.

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Monopoly

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A market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable.

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Natural Monopoly

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A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sactioned and regulated.

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Supply

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The quantity of products that producers are willing to offer for sale at different market prices.

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Supply Curve

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The graphed relationship between price and quantity from a supplier standpoint.

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Demand

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The quantity of products that consumers are willing to buy at different market prices.

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Demand Curve

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The graphed relationship between price and quantity from a customer demand standpoint.

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Equilibrium Price

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The price associated with the point at which the point the quatity demanded of a product equals the quantity supplied.

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Socialism

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An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare.

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Communism

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An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government.

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Mixed Economies

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Economies that embody elements of both planned and market-based economic systems.

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Privatization

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The process of converting government owned businesses to private ownership.

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Gross Domesitc Product (GDP)

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The total value of all final goods and services produced within a nation's physical boundaries over a given period of time.

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Unemployment Rate

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The percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment.

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Business Cycle

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The periodic of economic downturn, marked by rising unemployent and falling business production.

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Recession

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An economic downturn marked by a decrease in the GDP for two consecutive quarters.

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Depression

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An especially deep and long-lasting recession.

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Recovery

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A period of rising economic growth and employent.

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Expansion

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A period of robust economic growth and high employment.

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Inflation

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A period of rising average prices across the economy.

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Hyperinflation

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An average monthly inflation rate of more than 50%.

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Disinflation

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A period of slowing average prices increases across the economy.

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Deflation

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A period of falling average prices across the economy.

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Consumer Price Index (PPI)

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A measure of inflation that evaluates the change over time in the weighted average wholesale prices.

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Productivity

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The basic relationship between the production of goods and services (output) and the resources needed to produce them (input), calculated via the following equation: output/input=productivity.

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Money supply

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The total amount of money within the overall economy.

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M1 Money supply

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Includes all currency plus checking accounts and traveler's checks.

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Open Market Operations

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The Federal Reserve function of buying and selling government securities, which include treasury bonds, notes, and bills.

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Discount Rate

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The rate of interest that the Federal Reserve charges when it loans funds to banks.

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Reserve Requirement

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A rule set by the Fed, which specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank's deposits.

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Federal Deposit Insurance Corporation (FDIC)

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A federal agency that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank.