BUS-121-51 Chapter 1

  1. Economic Stabilization Act
    $700 billion bailout plan created to stabilize the nation's economy and restore confidence in the banking and financial industries
  2. Free Enterprise
    the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it.
  3. Business
    the organized effort of individuals to produces and sell, for a profit, the products and services that satisfy society's needs.
  4. Profit
    what remains after all business expenses have been deducted from sales revenue.
  5. Stateholders
    all the different people or groups of people who are affected by the policies and decisions made by an organization.
  6. Economics
    the study of how wealth is created and distributed.
  7. Microeconomics
    the study of the decisions made by individuals and businesses.
  8. Macroeconomics
    the study of the national economy and the global economy.
  9. Economy
    the way in which people deal with the creation and distribution of wealth.
  10. Factors of Production
    resources used to produce goods and services.
  11. Entrepreneur
    a person who takes a calculated risk, time, effort, and money to start and operate a business.
  12. Capitalism
    an economic system in which individuals own and operate the majority of businesses that provide goods and services.
  13. Invisible Hand
    a term created by Adam Smith to describe how an individual's own personal gain benefits others and a nation's economy.
  14. Market Economy
    an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices.
  15. Mixed Economy
    an economy that exhibits elements of both capitalism and socialism.
  16. Consumer Products
    goods and services purchased by individuals for personal consumption.
  17. Command Economy
    an economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available good and services will be produced, and who owns and controls the major factors of the production.
  18. Socialism Economy
    the key industries are owned and controlled by the government.
  19. Productivity
    the average level of output per worker per hour.
  20. Gross Domestic Product (GDP)
    the total dollar value of all goods and services produced by all people within the boundaries of a country during a 1-year period.
  21. Inflation
    a general rise in the level of prices.
  22. Defaltion
    a general decrease in the level of prices.
  23. Consumer Price Index (CPI)
    a monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area.
  24. Producer Price Index (PPI)
    an index that measures prices at the wholesale level.
  25. Business Cycle
    the recurrence of periods of growth and recession in the nation's economic activity.
  26. Recession
    two or more consecutive 3-month periods of decline in the country's GDP.
  27. Depression
    a severe recession that lasts longer than a secession.
  28. Monetary Policies
    Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates.
  29. Fiscal Policy
    government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending.
  30. Federal Deficit
    a shortfall created when the federal government spends more in a fiscal year than it receives.
  31. National Debt
    the total of all federal deficits.
  32. Conpetition
    rivalry among businesses for sales to potential customers.
  33. Perfect (or Pure) Competition
    the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product.
  34. Supply
    the quantity of a product that producers are willing to sell at each of various prices.
  35. Demand
    the quantity of a product that buyers are willing to purchase at each of various prices.
  36. Market Price
    the price at which the quantity demanded is exactly equal to the quantity supplied.
  37. Monopolistic competition
    a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors.
  38. Product Differentiation
    the process of developing and promoting differences between one's products and all similar products.
  39. Oligopoly
    a market (or industry) in which there are few sellers.
  40. Monopoly
    a market with only one seller.
  41. Natural Monopoly
    an industry requiring huge investments in capital and within which any duplication of facilities would be wasteful and thus not in the public interest.
  42. Standard of Living
    a loose, subjective measure of how well off an individual or society is mainly in terms of wants satisfaction through goods and services.
  43. Barter
    a system of exchange in which goods or services are traded directly for other goods and/or services without using money.
  44. Domestic System
    a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the merchant entrepreneur.
  45. Factory System
    a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place.
  46. Specialization
    the separation of manufacturing process into distinct tasks and the assignment of the different tasks to different individuals.
  47. e-Business
    the organized effort of individuals to produce and sell through the Internet, for a profit, the products and services that satisfy society's needs.
  48. Sustainability
    meeting the needs of the present without compromising the ability of future generations to meet their own needs.
  49. Types of Economic Systems
    • Capitalism
    • Command
  50. Type of Competition
    • Perfect
    • Monopolistic
    • Monopoly
Card Set
BUS-121-51 Chapter 1
Terminology / Examples