Introduction to Business
The four types of unemployment are?
-Frictional -Structural -Cyclical -Seasonal
The total value of final goods and services produced in a country in a given year is called?
GDP
Studying a nation's economy as a whole is called _____________, while looking at the behavior of people and organizations in markets for products and services is called?
Macroeconomics and microeconomics
The trend toward a(n) ____________ price occurs naturally as supply and demand of products is negotiated between buyers and sellers
Market
Prices in a free market economy are determined by?
Supply and demand
The government in a _______________ economic and political system makes almost all economic decisions and almost all of the factors of production, whereas in capitalism the people make almost all economic decisions
command
When a government decides what goods and services will be produced, the country is functioning within a ________________ economy
command
Sara lives in a country where one needs the government's approval to move between cities. Sara lives in a(n)?
communist
The pace of inflation or deflation can be measured using monthly statistics from the?
consumer price index
The situation in which prices are declining is called?
deflation
A general rise in the prices of goods and services over time is called?
inflation
The United States, which has a very capitalistic economy, has introduced social welfare programs such as social security. China, which is a Communist country, has adopted many capitalist practices. One can conclude that?
pure communist or capitalist countries rarely exist today
A problem with measuring productivity in the service sector is that new technology improves the ________________ of the service, but not the _____________
quality and productivity
In a ______________, prices fell, people purchase fewer products, and businesses fell for two or more consecutive quarters
recession
When the economy stabilizes and then starts to grow, it is in which stage of the business cycle?
recovery
Jonathan is a very bright student who dreams of becoming the next Bill Gates. After graduation, he started working hard but soon realized that the amount of money he received after taxes will never allow him to save enough to become rich or open a high-growth business. However, he soon remembered in his country students do not have to pay for college and therefor he has no debt, Jonathan most likely lives in a(n)?
socialist country
If prices continue to rise as the economy is slowing, then ____________ is occurring
stagflation
Since governments need to pay for social programs in socialist countries, they raise the necessary funds by?
taxing citizens relatively steeply
The increase in U.S. productivity is primarily due to advances in?
technology
In a free market economy, as the price of a product increases, so will the amount supplied. Why?
-High prices lead to high profits, attracting new firms to the market. -High prices lead to increased revenues, which allow firms to buy more raw materials and employ more workers.
Monetary policy consists of the Federal Reserve's management of the?
-Money supply -Interest rate
Economists agree that there are four different degrees of competition within free markets. They include?
-Monopolies -Perfect competition -Oligopolies
In perfect competition?
-Products appear to be identical -There are many sellers
Which of these principles did Adam Smith believe is essential to the survival of an economy?
-freedom to own land or property -freedom to keep a business's profits
Fascial policy is the federal government's effort to keep the economy stable by increasing or decreasing?
-government spending -taxes
The second fascial policy tool is to put money from taxes into the economy by?
-increased spending on education -improving infrastructure such as highways -spending on infrastructure to create jobs
On a graph showing both supply and demand curves, the intersection point between the two curves shows the?
Equilibrium point
The indicator used by the U.S. Bureaus of Economic Analysis since 2014 to measure the total sales volume at all stages of production is?
Gross Output (GO)
When the seller controls the total supply of a product or service and sets the price, that seller is said to have?
Monopoly
According to Adam Smith, as long as farmers, laborers, and businesspeople received economic reward for their efforts, they would work hard. As a result of this self-directed desire to gain, the economy would prosper and everyone would become wealthier. Smith called this process?
The invisible hand
Increased government spending is a main ______________ policy tool
fiscal
In a free market, the _________________ tells producers how much to produce
price
Measuring levels of inflation, deflation, and stagflation are greatly facilitated by the use of _______________ indexes
price
A major problem with communism as a economic system is that the government has no idea what should be produced because?
prices do not reflect supply and demand as they do in free markets
GDP is the _______________ value of final goods and services produced in a _____________ in a given year
total and nation
The _____________ rate refers to the percentage of civilians at least 16 years old who do not have a job but tried to find a job within the prior 4 weeks
unemployment
Which of the following are correct in regards to a free-market economy?
-An economic system in which economic decisions are made by the market -Another name for capitalism
Rank the three economic system where the system with the least amount of government involvement is on the top and the system with the most government involvement is on the bottom.
-Capitalism -Socialism -Communism
In socialism?
-Government owns and operates basic industries such as steel mills, utilities, or transportation -Individuals own some smaller businesses and property
What are the characteristics of the recovery stage of a business cycle?
-The economy stabilizes -The economy starts to grow
Under monopolistic competition?
-There are a large number of sellers in the market -Products are perceived as different by the buyers
Adam Smith's theory is based on which of the following ideas?
-When people work to produce needed goods and services they help the economy grow -People work for their own prosperity -The "invisible hand" forms self-directed gain into social and economic benefits for everyone
Socialism has several negative outcomes such as?
-a brain drain -higher taxes -fewer incentives to work hard
Command economies include those that are?
-communist -socialist
Command economies includes those that are?
-communist -socialist
Businesses can benefit the community by?
-expanding and creating more jobs -hiring more workers -offering needed goods and services
The Commerce Department has concluded that Gross Domestic Output is a better indicator than GDP because?
-it is a better indicator of the business cycle -it is more consistent with economic growth theory -it shows that consumer spending is the effect, not the cause, of prosperity
The Commerce Department has concluded the Gross Output is a better indicator than GDP because?
-it is better indicator of the business cycle -it is more consistent with economic growth theory -it shows that consumer spending is the effect, not the cause, of prosperity
The Commerce Department has concluded that Gross Output is a better indicator than GDP because?
-it shows that consumer spending is the effect, not the cause, of prosperity -it is a better indicator of the business cycle -it is more consistent with economic growth theory
The benefits of socialism include?
-nationally supported child care -the reduction of inequality through taxation to support poorer people -nationally supported health care for all
The demand curve?
-shows the relationship between price and the quantity of items demanded -falls from left to right on a graph of the goods and services that consumers are willing to buy at different prices at different times
Higher interest rates?
-slow down the economy as businesses spend less money to expand -make money more expensive to borrow
Free markets contribute to the creation of wealth because?
-successful businesses hire others who prosper -successful business owners keep their profits and become wealthy
Productivity is important to businesses because the higher it is?
-the cost of production is lower, so profits can be higher -the cost of production is lower and prices can be lower -the lower the cost of producing goods and services
Sellers of soft drinks, such as Coca Cola and Pepsi are examples of monopolistic competition because?
-their market has a large number of sellers with similar products -they have buyers that perceive similar products as different through marketing
Theoretically, high taxes slow the economy because?
-they draw money away from the private sector to government -they reduce the incentives to start small businesses
The unemployment rate refers to the percentage of civilians at least 16 years old who are ___________ and ____________
-unemployed -tried to find a job within the prior 4 weeks
The supply concept refers to the relationship between the quantity of products produced and price. If the market price of a product increases, quantity supplied will ____. If the market price of a product decreases, quantity supplied will ______.
1. Increase 2. Decrease
In a free market capitalist system such as the United States?
1. Some people may accumulate great wealth 2. Some people do not accumulate much wealth
Businesses offer goods and services with the purpose of making a profit and eventually increasing their owners' wealth. Simultaneously, businesses that pursue profit also?
1. increase their employees' wealth by paying them for their work 2. create the opportunity for more wealth by producing goods and services used by other businesses.
The U.S. economy is spending tremendous amounts of money on new technologies. However, in the case of the service sector, this expense will not be reflected in the most important measurement of the state of the economy, productivity. Why?
An influx of machinery in the service industry may add to the quality of the service provided but not to the output per worker
What is the political and economic system in which the government makes almost all economic decisions and owns almost all the major factors of production, as well as choosing religion, where to live, and jobs for its citizens?
Communism
Some wages and salaries, rents, and leases as well as tax brackets and governmental benefits are based on the ________________ _______________ index making it an important indicator for the economy
Consumer price
The market price is determined where the _____________ curve intersects the _____________ curve
Demand and supply
______________ ______________ is the phrase coined by Smith in relationship with the process that turns self-directed gain into social and economic benefits for all
Invisible Hand
An oligopoly is a degree of competition in which?
Just a few sellers dominate the market
The operation of a nation's economy as a whole is?
Macroeconomics
Businesses like McDonald's and Burger King have some power over the price they charge in monopolistic competition because they can make consumers aware of product differences through?
advertising
When the government spends money on such projects as roads and bridges, it is expected that the money will trickle down to the costumers eventually leading to?
an increase in consumer spending
The demand curve slopes down from left to right showing that?
as the price decreases, the quantity demanded increases
Ina recent speech, House Representative Chavez called for less government regulation of business because regulation reduces profits and "private business owners pursuing wealth generates jobs." It is clear that Representative Chavez?
believes free markets provide incentives for businesses
The loss of the best and brightest people to other countries is the?
brain drain
The periodic rises and falls that occur in economies over time are called?
business cycles
In a free market system, decisions about what and how much is produced are made by?
buyers and sellers negotiating prices
In many developed nations such as the United States, the UK, Australia, and Canada, ________________ is the fundamental economic system
capitalism
_________________ is an economic system based on free markets, in which all or most of the factors of production and distribution are privately owned and are operated for profit
capitalism
A recession occurs when there are two or more consecutive quarters of?
decline in the GDP
If too many products are produced and there are too few buyers able to buy them, than ____________ will occur
deflation
Riding unemployment levels tend to stifle demand for goods and services, which can have the effect of forcing prices downward, a condition known as?
deflation
When prices are declining, ______________ is occurring
deflation
The quality of products that people are willing to buy at different prices at a specific time is called?
demand
A severe recession usually accompanied by deflation is called?
depression
GDP, unemployment rate, and price indexes are considered the three major?
economic indicators
Observing the distribution of goods and services to competing groups and understanding how society chooses to employ resources in this process is the study of?
economics
Capitalism is another term used to describe?
free-market economies
In government-controlled economies, the decision of what and how much to produce rests with?
government agencies
Mixed economies exist where some allocation of resources is made by the?
government and market
A persistent increase in the level in the of consumer prices or a persistent decline in purchasing power is the official definition of?
inflation
Studying the economic behavior of individual people and organizations in markets for particular products or services is?
microeconomics
In recent decades, most capitalist countries like the United States have moved toward socialism. Communist countries like China have moved toward capitalism. In other words, the trend is to move toward ______________ economies
mixed
Offering and controlling programs such as Medicare, Medicaid, and Social Security qualify the U.S. economy as a _______________ economy
mixed
The management of the money supply and rising and lowering interest rates by the Federal Reserve Bank is called _______________ policy
monetary
The _____________ ____________ refers to the sum of government deficits over time
national debt
The amount of money the federal government spends beyond what it gathers in taxes for a given fascial year is called the?
national deficit
The degree of competition in which just a few sellers dominate the market, such as the gasoline market, because the initial investment to enter the market is very high is called a(n)?
oligopoly
Producers are likely to be interested in a measurement of prices at the wholesale level so they will refer to the ___ price index
producer
The study of how to increase resources and to create the conditions that will make better use of their resources such as recycling and energy conservation is called?
resource development
The idea that that some basic businesses such as steel mills, coal mines and utilities, should be owned and controlled by the government is indicative of a _________________ economic system
socialist
A combination of free markets and some government control, such as that in China, is known as?
state capitalism
In an economic and political system called communism?
the government owns almost all the factors of production
