Mgmt 1 Ch 2

Front 1

Economics

Back 1

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

Front 2

What are the two major branches of economics?

Back 2

Macroeconomics

Microeconomics

Front 3

Macroeconomics

Back 3

Looks at the operation of a nation's economy as a whole (GDP, unemployment rate, price indexes)

Front 4

Microeconomis

Back 4

Looks at the behavior of people and organizations in particular markets (Why do people buy smaller cars when gas prices go up?)

Front 5

Resource Development

Back 5

The study of how to increase resources and create conditions that will make better use of them.

Front 6

Invisible Hand

Back 6

The process that turns self-directed gain into social and economic benefits for all (example farmers with workers and selling corps to gain money)

Front 7

Capitalism

Back 7

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit

Front 8

State Capitalism

Back 8

The state runs some businesses instead of private owners

Front 9

What are the Four Basic Rights of Capitalism?

Back 9

1.) The right to own private property
2.) The right to own a business and keep all that business's profits
3.) The right to freedom of competition
4.) The right to freedom of choice

Front 10

What is a free market?

Back 10

Market in which decisions about what and how much to produce are made by the market (buyers and sellers show that they want more t-shirts, prices will raise on the t-shirts and more types of shirts will be produced)

Front 11

Supply

Back 11

The quantities of products manufacturers or owners are willing to sell at different prices at a specific time

(The higher the price the more products will be supplied)

Front 12

Demand

Back 12

The quantity of products that people are willing to buy at different prices at a specific time

(The lower the price, the more people are willing to buy)

Front 13

Market Price

Back 13

The price toward which the market will trend

Front 14

What are the four different degrees of competition?

Back 14

1.) Perfect
2.) Monopolistic
3.) Oligopoly
4.) Monopoly

Front 15

Perfect Competition

Back 15

When there are many sellers in a market and none is large enough tot dictate the price of a product

Front 16

Monopolistic Competition

Back 16

A large number of sellers produce very similar products that buyers nevertheless perceive as different (hot dogs, sodas, computers)

Front 17

Oligopoly Competition

Back 17

A degree of competition in which just a few sellers dominate a market (tobacco, gasoline, cars, airline)

Front 18

Monopoly Competition

Back 18

One seller controls the total supply of a product or service and sets the price

Front 19

Socialism

Back 19

An economic system based on the premise that some/most basic businesses should be owned by the government so that profits can be more evenly distributed among the people

Front 20

Brain Drain

Back 20

The loss of the best and brightest people to other countries because of the socialist economy which taxes them higher percents so they are forced to move to a capitalist economy

Front 21

Communism

Back 21

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production

Front 22

Free-market economies (capitalism)

Back 22

The MARKET largely determines what goods and serves get produced, who gets them, how the economy grows

Front 23

Command economies (socialism/communism)

Back 23

The GOVERNMENT largely decides what goods and serves will be produced, who gets them and how the economy will grow

Front 24

Mixed Economies

Back 24

Where some allocation of resources is made by the market and some by the government

Front 25

What are the key economic indicators?

Back 25

1.) Gross Domestic Product
2.) Unemployment Rate
3.) Price indexes

Front 26

Gross Domestic Product (GDP)

Back 26

Total value of final goods and services produced in a country in a given year

(High GDP means high standard of living)

Front 27

Unemployment Rate

Back 27

The percentage of civilians at least age 16 who are unemployed and tried to find a job within the prior four weeks

Fictional (First job or quit cuz they didn't like it), Structural (Mismatch of firms or location/skills of job seekers), Cyclical (Ups and downs of the business cycle), Seasonal (labor demand varies over year like harvesting crops)

Front 28

Inflation

Back 28

A general rise in the prices of goods and services over time

Front 29

Disinflation

Back 29

Price increases are slowing

Front 30

Deflation

Back 30

Prices are declining

Front 31

Stagflation

Back 31

The economy is slowing but prices are going up anyhow

Front 32

Consumer Price Index (CPI)

Back 32

Consists of monthly statistics that measure the pace of inflation or deflation

Front 33

Producer Price Index (PPI)

Back 33

Measures prices at the wholesale level

Front 34

Business Cycles

4 cycles?

Back 34

Periodic Rises and falls that occur in economies over time

Boom-recession-depression-recovery

Front 35

Economic Boom

Back 35

business is booming

Front 36

Recession

Back 36

Two or more consecutive quarters of decline in the GDP

Front 37

Depression

Back 37

A severe recession, usually accompanied by deflation

Front 38

Recovery

Back 38

Economy stabilizes and starts to grow

Front 39

Fiscal Policy

Back 39

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

Front 40

The National Debt

Back 40

The sum of government deficits over time

Front 41

Government National Deficits

Back 41

Amount of money the federal government spends beyond what it gathers in taxes for a given fiscal year

(National Surplus is the opposite)

Front 42

Keynesian Economic Theory

Back 42

The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession

Front 43

Monetary Policy

Back 43

The management of the money supply and interest rates by the Federal Reserve Bank

(Booming Economy makes higher interests rates)

Front 44

Thomas Malthus

Back 44

Believed that economic progress is being limited by overpopulation

Front 45

Are socialism and communism the same thing?

Back 45

No

Front 46

The Business Cycle always includes a depression

Back 46

No