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Marketing Essentials - Ch 3
Based on the 2009 text (the orange book).
Terms in this set (30)
economy / economic system
The organized way a nation provides for the needs and wants of its people.
All the things used in producing goods and services. Also known as factors of production.
four factors of production
Land, labor, capital, and entrepreneurship.
Includes everything contained in the earth or found in the seas, for example: coal, crude oil, trees, plants, and soil.
Refers to all the people who work, including full-time and part-time workers. (Economies with well-educated and well-trained labor have an advantage.)
Includes money to start and operate a business and also the goods used in the production process, for example: factories, office buildings, computers, and tools.
Refers to the skills of people who are willing to invest their time and money to run a business. These people organize the factors of production (land, labor, and capital) to create goods and services that are part of an economy.
Nations have unlimited wants and needs for growth and development, but limited resources to meet them. The difference between wants and needs and available resources is called ________________. This forces nations to make choices.
Traditions and rituals (based on cultural or religious practices or ideals) determine which goods and services a nation will produce, how they will be produced, and for whom they will be produced.
In this type of economy, there is no government involvement in economic decisions. Individuals and companies own the means of production and businesses compete for consumers.
A system in which a country's government makes economic decisions and decides what, when, and how much will be produced and distributed. Under this system, the government controls the factors of production.
No economy is purely a traditional, market, or command economy. A meaningful economic classification depends on how much a government interferes with the free market.
capitalism, socialism, and communism
The three political philosophies that have shaped world economies.
A political and economic philosophy characterized by marketplace competition and private ownership of business. (Examples: The US and Japan)
A social, political, and economic philosophy in which the government, usually authoritarian, controls the factors of production. There is no private ownership of property or capital. (Examples: Cuba and North Korea)
A term used to described largely democratic countries, that have more government involvement in the economy than do capitalist nations. The main goal is to meet the basic needs for all and to provide employment for many. (Examples: Canada, Germany, and Sweden)
The move from socialist-based economies, which have many state-run businesses, toward a more capitalistic society. For example, Great Britain sold its national phone company, generating funds to offset budget deficits.
Previously referred to as "third world nations" (a term which is no longer appropriate), these are mostly poor countries with little industrialization that are trying to become more prosperous by developing their infrastructure (by improving the education levels of the labor force and on directing and using foreign investment efficiently).
Output per worker hour that is measured over a defined period of time, such as a week, month, or year.
Gross Domestic Product (GDP)
The output of goods and services produced by labor and property located within a country during a given year.
Gross National Product (GNP)
The total dollar value of goods and services produced by a nation, including goods and services produced abroad by US citizens and companies, during a given year.
Refers to rising prices.
low inflation rate
1 to 5 percent each year - is good because it shows than an economy is stable.
high inflation rate
10 percent or higher - devastates an economy. When inflation is high, money loses its value.
2 measures of inflation
1. The consumer price index
2. The producer price index
Consumer Price Index (CPI)
Measures the change in price over a period of time of some 400 specific retail goods and services used by the average urban household. (Also known as the Cost of Living Index)
Producer Price Index (PPI)
Measures wholesale price levels in an economy. It is often a trendsetter, as producer prices generally get passed along to the consumer. When there is a drop in the PPI, it is generally followed by a drop in the CPI.
Recurring changes in the economy, characterized by times of expansion and times of contraction.
A time when the economy is flourishing, sometimes referred to as a period of prosperity.
A period of economic slowdown that lasts for at least two quarters, during which companies reduce their workforce and consumers have less money to spend.
THIS SET IS OFTEN IN FOLDERS WITH...
Marketing Essentials - Ch 1
Marketing Essentials - Ch 2
Marketing Essentials - Ch 19
Marketing Essentials - Ch 10
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