Mgmt 1 - Ch2 Economy And The Business

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Economics

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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

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Macroeconomics

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the part of economics study that looks at the operation of a nation's economy as a whole

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Microeconomics

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the part of economics study that look at the behavior of people and organizations in particular markets

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Resource Development

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the study of how to increase resources and to create the conditions that will make better use of those resources.

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Invisible Hand

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a phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.

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Capitalism

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an economic system in which all or most of the factors of productivity and distribution are privately owned and operated for profit.

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Supply

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the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

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Demand

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

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Market Price

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the price determined by supply and demand.

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Perfect Competition

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the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.

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Monopolistic Competition

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the degree of consumption in which a large number of sellers produce very similar products that buyers nevertheless perceive as different

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Oligopoly

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a degree of competition in which just a few sellers dominate the market

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Monopoly

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a degree of competition in which only one seller controls the total supply of a product or service, and sets the price.

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Socialism

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an economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.

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Brain Drain

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the loss of the best and brightest people to other countries

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Communism

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

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Free-Market Economics

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economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows.

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Command Economies

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economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.

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Mixed Economies

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economic systems in which some allocation of resources is made by the market and some by the government.

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Gross Domestic Product (GDP)

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the total value of final goods and services produced in a country in a given year.

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Unemployment Rate

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the number of civilians at least 16 years who are unemployed and tried to find a job within the prior four weeks

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Inflation

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

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Disinflation

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a situation in which price increases are slowing (the inflation rate is declining)

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Deflation

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a situation in which prices are declining

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Stagflation

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a situation when the economy is slowing but prices are going up any how.

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Consumer Price Index

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Monthly statistics that measure the pace of inflation or deflation

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Business Cycles

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the periodic rises and falls that occur in economies over time.

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Recessions

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two or more consecutive quarters of decline in the GDP.

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Depression

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a service recession, usually accompanied by deflation.

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Fiscal Policy

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

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National Debt

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the sum of government deficits over time.

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Keynesian Economic Theory

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

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Monetary Policy

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

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Frictional Unemployment

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those people who have quit work because they didn't like the job, the boss, or the working conditions and who haven't yet found a new job.

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Structural Unemployment

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unemployment caused by restructuring of firms or by a mismatch between the skills (or location) of job seekers and the requirements (or location) of available jobs (e.g. coal miners in an area where mines have been closed)

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Cyclical Unemployment

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occurs because of a recession or similar downturn in the business cycle (the ups and downs of business growth and decline over time). This type of unemployment is the most serious.

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Seasonal Unemployment

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occurs where demand for labor varies over the year, as with the harvesting of crops.