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BUSN 110 - Ch. 2 Slides
Terms in this set (60)
a financial and social system of how resources flow through society, from production to distribution, to consumption
the study of the choices that people, companies, and governments make in allocating society's resources
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
designed to encourage growth, boost employment, and curb inflation
Each year, the government must create a ______, or a financial plan, that outlines expected revenue from taxes and fees, and expected spending
overage that occurs when revenue is higher than expenses over a given period of time
shortfall that occurs when expenses are higher than revenue over a given period of time
the sum of all the money that the federal government has borrowed over the years and not yet repaid
federal reserve decisions that shape the economy by influencing interest rates and the supply of money
privately owned financial institutions that accept demand deposits and make loans and provide other services for the public
influence the size of the money supply
the core purpose of the Fed is to...
anything generally accepted as a medium of exchange, a measure of value, or a means of payment
the total amount of money within the overall economy
a structure for allocating limited resources
an economic system--also known as the private enterprise or free market system--based on private ownership, economic freedom, and fair competition
- hard work
paramount importance is given to...
- nonprofit organizations
___________, __________, or _________ _____________ privately owns the vast majority of enterprises (with only a small fraction owned by the government)
offer value to their customers (otherwise, their customers will choose to go elsewhere)
To thrive in a free enterprise system, companies must...
attract top-quality talent and supplies
businesses must also offer value to their employees and suppliers in order to...
- right to own a business and keep after-tax profits
- right to private property
- right to free choice
- right to fair competition
List the Fundamental Rights of Capitalism
Right to own a business and keep after-tax profits
Which Fundamental Right of Capitalism is a powerful motivator for business owners?
Right to a private property
Which Fundamental Right of Capitalism means that individuals and private businesses can buy, sell, and use property in any way that makes sense to them?
Right to free choice
Which Fundamental Right of Capitalism directly feeds competition, creating a compelling incentive for business owners to offer the best goods and services at the lowest prices?
Right to fair competition
Which Fundamental Right of Capitalism is when the government's role is to create a level playing field by establishing regulations and monitoring the competition to ensure compliance?
- pure competition
- monopolistic competition
List the four degrees of competition
a market structure with many competitors selling virtually identical products. Barriers to entry are quite low
a market structure with many competitors selling differentiated products; barriers to entry are low
a market structure with only a handful of competitors selling products that can be similar or different. Barriers to entry are typically high
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
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 _______ __________ are government sanctioned and regulated.
The degree of competition varies between industries. A ____ ___________ ensures that a sole producer does not control the entire market's price.
In ____________ ____________, producers have some control over the prices of their products, depending on the value that they offer their customers.
Breaking into a market characterized by ________ can be tough because it typically requires a huge upfront investment.
__________ tend to harm economies, and that's why most __________ have been made illegal under acts such as the Sherman Antitrust Act (1890) and the Clayton Antitrust Act (1914).
range of products and prices
The dynamic interaction between buyers and sellers directly affects the...
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 customer demand standpoint
- the constant interaction between the supply and demand helps determine the market price in any given category
- price point at which the quantity demanded of a product equals the quantity supplied
The ______ _____ for most goods and services slopes downward as it moves to the right, since the quantity demanded tends to drop as prices rise.
- equilibrium price
- equilibrium quantity
The point where the quantity demanded equals the quantity supplied is the __________ _____, and the quantity associated with this point is called the __________ ________.
The constant interaction between the two forces helps determine the ______ _____ in any given category. In theory, ______ ______ adjust toward the point where the supply curve and the demand curve intersect.
an economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare
often interfere with effectiveness
an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government
Socialism and communism can be considered _______ _________, in which the government controls the economy.
- economies that embody elements of both planned and market-based economic systems
- help in meeting the needs of the citizens
government-owned businesses have turned to ____________
the process of converting government-owned businesses to private ownership
market or planned, ____ _________ will not be able to fulfill all the needs of the citizens. This is one of the reasons why most countries are opting for mixed economies.
In the last 30 years, the majority of economies have opted for ____________. The price of economic restructuring is very high and process to be a hurdle for nations undergoing market reforms.
gross domestic product (GDP)
total value of all final goods and services produced within a nation's physical boundaries over a given period of time
- measures the economic performance of individual nations
- compares the growth among nations
Vital measure of economic health.....
gross domestic product
All domestic production is included in the _____ ________ _______, even when the producer is foreign-owned.
- volunteer work
Gross domestic product levels tend to be somewhat understated since they don't include any activities such as...
- illegal activities
- legal goods
______ __________ and _____ _____ that are not reported to avoid taxation also are not taken into consideration.
list a key element of economic health.
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