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Social Science
Business
Contemporary Perspectives in Business TEST 2
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Terms in this set (54)
Free Enterprise
They system of business in which individuals are free to decide what to produce, how to produce it, and what price to sell it
Business
the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy societies needs.
capitalism
an economic system in which individuals own and operate the majority of businesses that provide goods and services
invisible hand
a term created by Adam Smith to describe how and individual's personal gain benefits others and a nation's economy
households
pr0vide businesses with labor, capital, and other resources; They are the consumers of goods and services
consumer products
goods and services purchased by individuals for personal consumption
command economy
an economic system in which the government decides WHAT goods and services will be produced, HOW they will be produced, FOR WHOM, and WHO owns the major factors of production
socialism
key industries are owned and controlled by the government (transportation, utilities, communications, banking)
communism
all workers contribute according to their abilites and and receve according to their needs
productivity
the average level of output per worker per hour
productivity
one way to measure a nation's economic performance is to asses its _______
fewer workers producing more goods can lead to higher unemployment. Therefore, it is good for employers but not always for those seeking jobs
is productivity growth always good?
GDP
the total dollar value of all goods and services produced by all people within the boundaries of a country during one year
inflation
the general rise in the level of prices
deflation
the general decrease in the level of prices
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Verified questions
QUESTION
You want to buy a house within 3 years, and you are currently saving for the down payment. You plan to save $9,000 at the end of the first year, and you anticipate that your annual savings will increase by 5% annually thereafter. Your expected annual return is 8%. How much will you have for a down payment at the end of Year 3?
QUESTION
You want to buy a house that costs $140,000. You have$14,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $126,000. However, the realtor persuades the seller to take a$126,000 mortgage (called a seller take-back mortgage) at a rate of 5%, provided the loan is paid off in full in 3 years. You expect to inherit $140,000 in 3 years; but right now all you have is$14,000, and you can afford to make payments of no more than $22,000 per year given your salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things.) a. If the loan was amortized over 3 years, how large would each annual payment be? Could you afford those payments? b. If the loan was amortized over 30 years, what would each payment be? Could you afford those payments? c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be?
QUESTION
Most firms like to have their stock selling at a high P/E ratio, and they also like to have extensive public ownership (many different shareholders). Explain how stock dividends or stock splits may help achieve those goals.
QUESTION
The real risk-free rate is 2.05%. Inflation is expected to be 3.05% this year, 4.75% next year, and 2.3% thereafter. The maturity risk premium is estimated to be $0.05 \times(t-1) \%$, where t=number of years to maturity. What is the yield on a 7-year Treasury note?
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