Contemporary Business Chapter 3

True

When a constant amount of inputs generates increased outputs, an increase in productivity occurs.

frictional unemployment

applies to members of workforce who are temporarily not working but are looking for jobs.

right; fall

As the number of suppliers of a product increases, the supply curve shifts to the _____ and the price will _____.

True

Assume that the number of first-time home buyers suddenly increases. The demand curve for houses is likely shift to the right.

right; rise

If buyers' incomes increase, the demand curve will shift to the _____ and the prices will _____.

False

If number of buyers increase, the demand curve for most products will shift to the left.

inflation

economic situation characterized by rising prices caused by a combination of excess consumer demand and increases in the cost of raw materials, component parts, human resources, and other factors of production.

hyperinflation

economic situation characterized by soaring prices.

socialism

economic system characterized by government ownership and operation of major industries such as communications.

planned economy

economic system in which government controls determine business ownership, profits, and resource allocation to accomplish government goals rather than those set by individual firms.

mixed market economy

economic system that draws from both types of economies, to different degrees.

communism

economic system which all property would be shared equally by the people of a community under the direction of a strong central government.

budget surplus

excess funding that occurs when government spends less than the amount of funds raised through taxes and fees

seasonal unemployment

joblessness of workers in a seasonal industry.

productivity

relationship between the number of units produced and the number of human and other production inputs necessary to produce them

budget deficit

situation in which the government spends more than the amount of money it raises through taxes.

balanced budget

situation in which total revenues raised by taxes equal the total proposed spending for the year.

economics

social science that analyzes the choices that people and governments make in allocating scarce resources.

Microeconomics

study of small economic units, such as individual consumers, families and businesses.

Gross Domestic Product (GDP)

sum of all goods and services produced within a country's boundaries during a specific time period, such as a year.

core inflation

inflation rate of an economy after energy and food prices are removed.

quantity of that product buyers will purchase

A demand curve is the schedule that shows the relationship between the price of a product and the _____.

people turn to lower-priced retailers for the goods they need.

During economic recession:

True

No country is an economic island in today's global economy

False

The U.S. government is trending away from deregulation and toward regulated monopolies.

a regulated monopoly

There is no direct competition in a particular industry, yet a firm operating in such an industry will have almost no control over pricing. This industry is an example of _____.

privatization

conversion of government-owned and operated companies into privately held businesses.

recession

cyclical economic contraction that lasts for six months or longer.

monetary policy

government actions to increase or decrease the money supply and change banking requirements and interest rates to influence bankers' willingness to make loans.

expansionary monetary policy

government actions to increase the money supply in an effort to cut the cost of borrowing, which encourages business decision makers to make new investments, in turn stimulating employment and economic growth

restrictive monetary policy

government actions to reduce the money supply to curb rising prices, over expansion, and concerns about overly rapid economic growth.

demand curve

graph of the amount of a product that buyers will purchase at a different price.

supply curve

graph that shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand.

regulated monopolies

market situation in which a local, state or federal government grants exclusive rights in a certain market to a single firm.

monopoly

market situation in which a single seller dominates trade in a good or service for which buyers can find no close substitutes.

oligopoly

market situation in which relatively few sellers compete and high start-up costs form barriers to keep out new competitors.

monopolistic competition

market structure in which large numbers of buyers and sellers exchange heterogeneous products so each participant has some control over price.

pure competition

market structure in which large numbers of buyers and sellers exchange homogeneous products and no single participant has a significant influence on price.

Producer Price Index (PPI)

measurement of the average change in prices of goods and services received by domestic producers.

Consumer Price Index (CPI)

measurement of the monthly average change in prices of goods and services

national debt

money owed by government to individuals, businesses and government agencies who purchase Treasury bills, Treasury notes, and Treasury bonds sold to cover expenditures.

deflation

opposite of inflation, occurs when prices continue to fall.

budget

organization's plan for how it will raise and spend money during a given period of time

cyclical unemployment

people who are out of work because of a cyclical contraction in the economy.

structural unemployment

people who remain unemployed for long periods of time, often with little hope of finding new jobs like their old ones.

unemployment rate

percentage of the total workforce actively seeking work but currently unemployed.

demand

willingness and ability of buyers to purchase goods and services.

supply

willingness and ability of sellers to provide goods and services.