Create an account
the difference between unlimited wants/needs and resources; forces everyone (nations and people) to make economic choices
the skills of people who are willing to invest their time and money to run a business
also called a Planned Economy; government answers questions and controls the factors of production
philosophy of government affects economic structure; all economies in the world today are considered to have this type
totalitarian form of gov't; one political party; people share common economic and political goals; ex: Cuba, North Korea, China
gov't tries to reduce differences between the rich and poor; lots of gov't assistance social service programs; key industries run by gov't; ex: Germany, Great Britain, Canada, France
democratic government; marketplace competition and private ownership = free enterprise; ex: US, Japan
Characteristics of Free Enterprise
freedom of ownership, competition, risk, profit, supply and demand
the relationship between the amount of a good or service that businesses are willing and able to make available and the price
the relationship between the amount of a good or service that consumers are willing and able to purchase and the price
Gross domestic product (GDP)
output of goods and services produced by labor and property located within a country; 2008 US GDP = $14.2 Trillion
rising prices; 1-5% is stable; 10% or more is devastating to an economy; CPI is used to measure inflation
Gross National Product (GNP)
goods and services produced by a nation, including goods produced abroad by a country's citizens and companies
Consumer Price Index (CPI)
measures the change in price of goods over time of 400 retail goods/services used by the average household
stage when the economy is flourishing/growing; unemployment low, consumer confidence and spending is high
How can the gov't affects the business cycle?
laws and programs such as bailouts, social services, stimulus packages
low point in the business cycle, transition from recession to recovery, economy stops slowing and begin to see signs of recovery
encourages individuals to start and operate their own business in a competitive system without government involvement
freedom of ownership
personal property (cars, homes, land, etc.) and business ownership and intellectual property (patent, trademark, copyrights)
struggle for customers
price (focus on sale price of the product) vs. non-price competition (focus on quality, service, location and reputation)
government financed agencies such as education, military, social security, medicare, etc.
diagram of the company's departments and jobs with lines of authority clearly shown
having a product available at a certain time of year or a convenient time (ex: 24 hr ATM, or selling bathing suits in Feb/March)
exchange of a product for money; retailers may accept cash, credit or finance the purchase
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