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BUS - 101 Mid-term
Terms in this set (167)
The study of a country's overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies.
the study of smaller economic units such as individual consumers, families, and individual businesses
Government efforts to influence the economy through taxation and spending
Federal Reserve decisions that shape the economy by influencing interest rates and the supply of money
Federal Deposit Insurance Corporation (FDIC)
A federal agency that insures deposits in banks and thrift institutions for up to $250,000 per customer, per bank.
An economic system—also known as the private enterprise or free market system—based on private ownership, economic freedom, and fair competition.
A market structure with many competitors selling virtually identical products. Barriers to entry are quite low. (Almost doesn't exist)
A market structure with many competitors selling differentiated products. Barriers to entry are low. (Largest competition)
A market structure with only a handful of competitors selling products that can be similar of different. Barriers to entry are typically high. (Few sellers. Lots of buyers.)
A market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable. (mostly government based)
natural monopoly (Competition)
A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sanctioned and regulated.
The quantity of products that producers are willing to offer for sale at different market prices.
the graphed relationship between price and quantity from a supplier standpoint
The quantity of products that consumers are willing to buy at different market prices.
the graphed relationship between price and quantity from a consumer demand standpoint
an economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare. (Planned economies)
An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government. (Planned economies)
Economies that embody elements of both planned and market-based economic systems.
The process of converting government-owned businesses to private ownership.
Gross Domestic Product (GDP)
the total value of all final goods and services produced within a nation's physical boundaries over a given period of time
the portion of people in the labor force over age 16 who do not have jobs and are actively seeking employment
The periodic contraction and expansion that occur over time in virtually every economy.
An economic downturn marked by a decrease in the GDP for two consecutive quarters.
An especially deep and long-lasting recession.
a period of rising economic growth and employment
a period of robust economic growth and high employment
a period of rising average prices across the economy
An average monthly inflation rate of more than 50 percent.
Consumer Price Index (CPI)
A measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.
the basic relationship between the production of goods and services (output) and the resources needed to produce them (input) calculated via the following equation: output/input = productivity
the money that a business earns in sales (or revenue), minus expenses, such as the cost of goods and the cost of salaries. Revenue - Expenses = Profit (or Loss)
when a business incurs expenses that are greater than its revenue
people who risk their time, money, and other resources to start and manage a business
standard of living
the quality and quantity of goods and services available to a population
business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain (same as businesses)
factors of production
land, labor, capital, entrepreneurship, knowledge, and technology
the rate at which a new product moves from conception to commercialization
an international economic and political movement designed to help goods and services flow more freely across international boundaries
General Agreement on Tariffs and Trade (GATT)
An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide.
a set of beliefs about right and wrong, good and bad
universal ethical standards
ethical norms that apply to all people across a broad spectrum of situations (no such thing)
caring, citizenship, fairness, respect, responsibility, trustworthiness
a decision that involves a conflict of values; every potential course of action has some significant negative consequences
the obligation of a business to contribute to society (Someone decided what you are doing is not good enough)
any groups that have a stake - or a personal interest - in the performance and actions of an organization
the strategy of deliberately designing products to fail in order to shorten the time between purchases
Privately owned financial institutions that accept demand deposits and make loans and provide other services for the public
the relationship between the price of a good or a service and the benefits that it offers its customers
the opportunity of giving up the second-best choice when making a decision
the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources
the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries
(also contract manufacturing) Contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production.
buying products domestically that have been produced or grown in foreign nations
selling products in foreign nations that have been produced or grown domestically
a voluntary agreement under which two or more people act as co-owners of a business for profit
when two or more companies join forces - sharing resources, risks, and profits, but not actually merging companies - to pursue specific opportunities
An agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses. Strategic alliances typically involve less formal, less encompassing agreements than partnerships.
a country's physical facilities that support economic activity
Transportation, communication, energy, and finance
national policies designed to restrict international trade, usually with the goal of protecting domestic businesses
taxes levied against imports
limitations on the amount of specific products that may be imported from certain countries during a given time period
a complete ban on international trade of a certain item, or a total halt in trade with a particular nation
World Trade Organization (WTO)
a permanent global institution to promote international trade and to settle international trade disputes
a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations
a group of countries that have eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations
North American Free Trade Agreement (NAFTA)
The treaty among the United States, Mexico, and Canada that eliminated trade barriers and investment restrictions over a 15-year period starting in 1994.
European Union (EU)
the world's largest common market, composed of 28 European nations
A social movement that focuses on four key consumer rights: (1) the right to be safe, (2) the right to be informed, (3) the right to choose, and (4) the right to be heard.
Market capitalization (market cap)
the market value of a publicly traded company's outstanding shares. It is equal to the share price multiplied by the number of shares outstanding.
a form of business ownership with a single owner who usually actively manages the company
a partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm
a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners
articles of incorporation
the document filed with a state government to establish the existence of a new corporation
When owners are not personally liable for claims against their firm. Owners with limited liability may lose their investment in the company, but their other personal assets are protected.
Limited Liability Company (LLC)
a form of business ownership that offers both limited liability to its owners and flexible tax treatment
a partnership that includes at least one general partner who actively manages the company and accepts unlimited liability and one limited partner who gives up the right to actively manage the company in exchange for limited liability
Limited Liability Partnership (LLP)
a form of partnership in which all partners have the right to participate in management and have limited liability for company debts
an owner of a corporation
an organization that pools contributions from investors, clients, or depositors and uses these funds to buy stocks and other securities
board of directors
the individuals who are elected by stockholders of a corporation to represent their interests
a form of corporation that avoids double taxation by having its income taxed as if it were a partnership
a corporation that does not seek to earn a profit and differs in several fundamental respects from C corporations
The most common type of corporation, which is a legal business entity that offers limited liability to all of its owners, who are called stockholders
a corporate restructuring in which one firm buys another
A corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.
a combination of two firms that are in the same industry
a combination of two firms that are in unrelated industries
the transfer of total or partial ownership of some of a firm's operations to investors or to another company
the contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties
Franchise Disclosure Document (FDD)
a detailed description of all aspects of a franchise that the franchisor must provide to the franchisee at least 14 calendar days before the franchise agreement is signed
people who risk their time, money, and other resources to start and manage a business
internal locus of control
a deep-seated sense that the individual is personally responsible for what happens in his or her life
external locus of control
a deep-seated sense that forces other than the individual are responsible for what happens in his or her life
individuals who invest in start-up companies with high growth potential in exchange for a share of ownership
venture capital firms
companies that invest in start-up businesses with high growth potential in exchange for a share of ownership
A small segment of a market with fewer competitors than the market as a whole. It tend to be quite attractive to small firms.
a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives
a system for recognizing, organizing, analyzing, and reporting information about the financial transactions that affect an organization
generaly accepted accounting principles (GAAP)
a set of accounting standards that is used in the preparation of financial statements
the branch of accounting that prepares financial statements for use by owners, creditors, suppliers, and other external stakeholders
Finanacial Accounting Standards Board ( FASB)
the private board that establishes the generally accepted accounting principles used in the practice of financial accounting
a financial statement that reports the financial position of a firm by identifying and reporting the value of the firm's assets, liabilities, and owners' equity - selfie
Assets = Liabilities + Owner's Equity
resources owned by a firm
claims that outsiders have against a firm's assets
the claims a firm's owners have against their company's assets (often called "stockholders' equity" on balance sheets of corporations)
the financial statement that reports the revenues, expenses, and net income that resulted from a firm's operation over an accounting period - video
increases in a firm's assets that result from the sale of goods, provision of services, or other activities intended to earn income
resources that are used up as the result of business operations
the difference between the revenue a firm earns and the expenses it incurs in a given time period
analysis of financial statements that compares account values reported on these statements over two or more years to identify changes and trends
the branch of accounting that provides reports and analysis to managers to help them make informed business decisions
the value of what is given up in exchange for something
a cost that involves the payment of money or other resources
the opportunity cost that arises when a firm uses owner-supplied resources
costs that remain the same when the level of production changes within some relevant range
costs that vary directly with the level of production
costs that are incurred directly as the result of some specific cost object
costs that are the result of a firm's general operations and are not directly tied to any specific cost object
Activity-based costing (ABC)
a technique to assign product costs based on links between activities that drive costs and the production of specific products
the funds a firm uses to acquire its assets and finance its operations
the functional area of business that is concerned with finding the best sources and uses of financial capital
the observation that financial opportunities that offer high rates of return are generally riskier than opportunities that offer lower rates of return
financial ratio analysis
computing ratios that compare values of key accounts listed on a firm's financial statements
an asset that can quickly be converted into cash with little risk of loss
financial ratios that measure the ability of a firm to obtain the cash it needs to pay its short-term debt obligations as they come due
the use of debt in a firm's capital structure
ratios that measure the extent to which a firm relies on debt financing in its capital structure
ratios that measure the rate of return a firm is earning on various measures of investment
spontaneous financing granted by sellers when they deliver goods and services to customers without requiring immediate payment
line of credit
A financial arrangement between a firm and a bank in which the bank pre-approves credit up to a specified limit, provided that the firm maintains an acceptable credit rating
short-term (and usually unsecured) notes issued by large corporations
the part of a firm's net income it reinvests
a restriction lenders impose on borrowers as a condition of providing long-term debt financing
funds provided by the owners of a company
funds provided by lenders (creditors)
the mix of equity and debt financing a firm uses to meet its permanent financing needs
safe and highly liquid assets that many firms list with their cash holdings on their balance sheet
US Treasury bills (T-bills)
short-term marketable IOUs issued by the U.S. federal government
time value of money
the principle that a dollar received today is worth more than a dollar received in the future
Certificate of Deposit (CD)
An interest-earning deposit that requires the funds to remain deposited for a fixed term. Withdrawal of the funds before the term expires results in a financial penalty.
the amount of money that, if invested today at a given rate of interest (called the discount rate), would grow to become some future amount in a specified number of time periods
Net Present Value (NPV)
the sum of the present values of expected future cash flows from an investment, minus the cost of that investment
markets that transfer funds from savers to borrowers
a financial intermediary that obtains funds by accepting checking and savings deposits and then lending those funds to borrowers
a depository institution that is organized as a cooperative, meaning that it is owned by its depositors
savings and loan association
a depository institution that has traditionally obtained most of its funds by accepting savings deposits, which have been used primarily to make mortgage loans
Federal Reserve Act of 1913
The law that established the Federal Reserve System as the central bank of the United States.
Banking Act of 1933
The law that established the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits. It also prohibited commercial banks from selling insurance or acting as investment banks.
Securities Act of 1933
The first major federal law regulating the securities industry. It requires firms issuing new stock in a public offering to file a registration statement with the SEC.
Securities Exchange Act of 1934
A federal law dealing with securities regulation that established the Securities and Exchange Commission to regulate and oversee the securities industry.
Securities and Exchange Commission
the federal agency with primary responsibility for regulating the securities industry
Financial Services Modernization Act of 1999
an act that overturned the section of the Banking Act of 1933 that prohibited commercial banks from selling insurance or performing the functions of investment banks
the basic form of ownership in a corporation
the return on an asset that results when its market price rises above the price the investor paid for it
a type of stock that gives its holder preference over common stockholders in terms of dividends and claims on assets
a formal debt instrument issued by a corporation or government entity
a strategy of investing in a wide variety of securities in order to reduce risk
an institutional investor that raises funds by selling shares to investors and uses the accumulated funds to buy a portfolio of many different securities
the amount of interest earned on a bond, expressed as a percentage of the bond's current market price
a bond or share of preferred stock that gives its holder the right to exchange it for a stated number of shares of common stock
a primary market issue in which new securities are offered to any investors who are willing and able to purchase them
intitial public offering (IPO)
the first time a company issues stock that may be bought by the general public
stock (or securities) exchange
an organized venue for trading stocks and other securities that meet its listing requirements
a statistic that tracks how the prices of a specific set of stocks have changed
Dow Jones Industrial Average (DJIA)
An index that tracks stock prices of 30 large, well-known U.S. corporations.
Standard & Poor's 500
a stock index based on prices of 500 major US corporations in a variety of industries and market sectors
United States-Mexico-Canada Agreement (USMCA)
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