Chapter 2

  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.
  2. looks at operation of a nation's economy as a whole
  3. looks at behavior of people and organizations in markets for particular products or services
  4. the study of how to increase resources and create conditions that will make better use of them
    resource development
  5. used to describe the process that turns self-directed gain into social and economic benefits for all.
    invisible hand
  6. all or most of the factors of production and distribution are owned by individuals
  7. 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
  8. the quantities of products manufacturers or owners are willing to sell at different prices at a specific time
  9. the quantity of products that people are wiling to buy at different prices at a specific time
  10. determined by supply and demand; price toward which the market will trend
    market price
  11. exists when there are many sellers in a market and none is large enough to dictate the price of a product
    perfect competition
  12. a large number of sellers produce very similar products that buyers nevertheless perceive as different
    monopolistic competition
  13. degree of competition in which just a few sellers dominate a market
  14. when one seller controls the total supply of a product or service, and sets the price
  15. 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
  16. the loss of the best and brightest people to other countries
    brain drain
  17. economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
  18. exist when the market largely determines what goods and services get produced, who gets them, and how the economy grows (capitalism)
    free-market economics
  19. exist where some allocation of resources is made by the market and some by the government
    mixed economies
  20. the total value of final goods and services produced in a country in a given year.
    gross domestic product (GDP)
  21. percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
    unemployment rate
  22. general rise in the prices of goods and services over time.
  23. when the price increases are slowing (inflation rate is declining)
  24. prices are declining
  25. when the economy is slowing but prices are going up anyhow
  26. consists of monthly statistics that measure the pace of inflation or deflation
    consumer price index (CPI)
  27. measures prices at the wholesale level
    producer price index (PPI)
  28. the periodic rises and falls that occur in economies over time
    business cycles
  29. two or more consecutive quarters of decline in the GDP
  30. severe recession, usually accompanied by deflation
  31. the sum of government deficits over time.
    national debt
  32. a government policy of increasing spending and cutting taxes could stimulate the economy in a recession
    keynesian economic theory
  33. the management of the money supply and interest rates by the Federal Reserve Bank
    monetary policy
  34. federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending
    fiscal policy
  35. economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy grows.
    command economies
Card Set
Chapter 2
Chapter 2 of business book