Chapter 1 and chapter 3
Economic System
A nation's economic system is the combination of policies, laws, and choices made by its government to establish the systems that determine what goods and services are produced and how they are allocated.
Not-for-profit organization
A not-for-profit organization is an organization that exists to achieve some goal other than the usual business goal of profit. Charities
Mixed Economies
Canada, Sweden, and the UK, among others, are also called mixed economies; that is, they use more than one economic system.
Microeconomics
In contrast, microeconomics focuses on individual parts of the economy, such as households or firms.
Purchasing Power
Inflation's higher prices reduce purchasing power, the value of what money can buy.
Demand-pull Inflation
Demand-pull inflation occurs when the demand for goods and services is greater than the supply.
Demography
Demography is the study of people's vital statistics, such as their age, gender, race and ethnicity, and location.
Economics
Economics is the study of how a society uses scarce resources to produce and distribute goods and services.
Entrepreneurs
Entrepreneurs are the people who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal.
Knowledge
Knowledge refers to the combined talents and skills of the workforce and has become a primary driver of economic growth.
Frictional Unemployment
Frictional unemployment is short-term unemployment that is not related to the business cycle.
Goods
Goods are tangible items manufactured by businesses, such as laptops.
Profit
If Microsoft has money left over after it pays all costs, it has a profit.
Federal Budget Deficit
If the government spends more for programs (social services, education, defense) than it collects in taxes, the result is a federal budget deficit.
Macroeconomics
Macroeconomics is the study of the economy as a whole.
Monetary Policy
Monetary policy refers to a government's programs for controlling the amount of money circulating in the economy and interest rates.
Relationship Management
One of the most important is relationship management, which involves building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships.
Productivity
Productivity is the amount of goods and services one worker can produce.
Quality of Life
Quality of life refers to the general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time.
Knowledge Workers
Recent statistics suggest that the number of U.S. knowledge workers has doubled over the last 30 years, with an estimated 2 million knowledge job openings annually.
Revenue
Revenue is the money a company receives by providing services or selling goods to customers.
Risk
Risk is the potential to lose time and money or otherwise not be able to accomplish an organization's goals.
Services
Services are intangible offerings of businesses that can't be held, touched, or stored.
Socialism
Socialism is an economic system in which the basic industries are owned by the government or by the private sector under strong government control.
Structural Unemployment
Structural unemployment is also unrelated to the business cycle but is involuntary.
Technology
Technology is the application of science and engineering skills and knowledge to solve production and organizational problems.
Federal Reserve System (the Fed)
The Federal Reserve System (the Fed), the central banking system of the United States, prints money and controls how much of it will be in circulation.
National Debt
The accumulated total of these past deficits is the national debt, which now amounts to about $19.8 trillion, or about $61,072 for every man, woman, and child in the United States.
Communism
The complete opposite of capitalism is communism. In a communist economic system, the government owns virtually all resources and controls all markets.
Demand Curve
The higher the price, the lower the quantity demanded, and vice versa. A graph of this relationship is called a demand curve.
Seasonal Unemployment
The last type is seasonal unemployment, which occurs during specific times of the year in certain industries.
Gross domestic Product (GDP)
The most basic measure of economic growth is the gross domestic product (GDP). GDP
Market Structure
The number of suppliers in a market defines the market structure.
Fiscal Policy
The other economic tool used by the government is fiscal policy, its program of taxation and spending.
Producer Price Index (PPI)
The producer price index (PPI) measures the prices paid by producers and wholesalers for various commodities, such as raw materials, partially finished goods, and finished products.
Consumer Price Index (CPI)
The rate of inflation is most commonly measured by looking at changes in the consumer price index (CPI), an index of the prices of a "market basket" of goods and services purchased by typical urban consumers.
Inflation
The situation in which the average of all prices of goods and services is rising is called inflation.
Standard of living
The standard of living of any country is measured by the output of goods and services people can buy with the money they have.
Capital
The tools, machinery, equipment, and buildings used to produce goods and services and get them to the consumer are known as capital
Business Cycles
These upward and downward changes are called business cycles.
Barriers To Entry
This market structure is characterized by barriers to entry—factors that prevent new firms from competing equally with the existing firm.
Unemployment rate
To determine how close we are to full employment, the government measures the unemployment rate.
Factors of Production
To provide goods and services, regardless of whether they operate in the for-profit or not-for-profit sector, organizations require inputs in the form of resources called factors of production. Four
Supply
We must also look at supply, the quantity of a good or service that businesses will make available at various prices.
Crowding Out
When government takes more money from business and consumers (the private sector), a phenomenon known as crowding out occurs.
Contractionary Policy
With contractionary policy, the Fed restricts, or tightens, the money supply by selling government securities or raising interest rates.
Expansionary Policy
With expansionary policy, the Fed increases, or loosens, growth in the money supply.
Perfect (pure) Competition
perfect (pure) competition include: A large number of small firms are in the market. The firms sell similar products; that is, each firm's product is very much like the products sold by other firms in the market. Buyers and sellers in the market have good information about prices, sources of supply, and so on. It is easy to open a new business or close an existing one.
Business
A business is an organization that strives for a profit by providing goods and services desired by its customers.
Recession
A decline in GDP that lasts for two consecutive quarters (each a three-month period) is called a recession.
Supply Curve
A graph of the relationship between various prices and the quantities a business will supply is a supply curve.
Economic Growth
An increase in a nation's output of goods and services is economic growth.
Oligopoly
An oligopoly has two characteristics: A few firms produce most or all of the output. Large capital requirements or other factors limit the number of firms.
Strategic alliances
Another important way companies stay competitive is through strategic alliances (also called strategic partnerships).
Full Employment
Another macroeconomic goal is full employment, or having jobs for all who want to and can work.
Circular Flow
Another way to see how the sectors of the economy interact is to examine the circular flow of inputs and outputs among households, businesses, and governments as shown in Exhibit 1.6.
Pure Monopoly
At the other end of the spectrum is pure monopoly, the market structure in which a single firm accounts for all industry sales of a particular good or service.
Savings Bonds
At times, therefore, the government has instructed commercial banks to reduce their total debt by divesting some of their bond holdings. That's also why the Treasury created savings bonds
Capitalism
Capitalism, also known as the private enterprise system, is based on competition in the marketplace and private ownership of the factors of production (resources).
Cost-Push Inflation
Cost-push inflation is triggered by increases in production costs, such as expenses for materials and wages.
Costs
Costs are expenses for rent, salaries, supplies, transportation, and many other items that a company incurs from creating and selling goods and services.
Cyclical unemployment
Cyclical unemployment, as the name implies, occurs when a downturn in the business cycle reduces the demand for labor throughout the economy.
Monopolistic Competition
define the market structure known as monopolistic competition: Many firms are in the market. The firms offer products that are close substitutes but still differ from one another. It is relatively easy to enter the market.
Equilibrium
we see that they cross at a certain quantity and price. At that point, labeled E, the quantity demanded equals the quantity supplied. This is the point of equilibrium. (look up definition)