Business 110 Exam 1

Code of ethics

A formal, written document that defines the ethical standard of an organization and gives employees the information they need to make ethical decisions across a range of situations

Monopoly

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

Oligopoly

A market structure with only a handful of competitors selling products the can be similar or different; barriers to entry are typically high

Deflation

A period of falling average prices across the economy

Recovery

A period of rising economic growth and employment

Disinflation

A period of slowing average price increases across the economy

Consumerism

A social movement that focuses on four key consumer rights; the right to be safe, to be informed, to choose, and to be heard

Economic System

A structure for allocating limited resources

Social audit

A systematic evaluation of how well a firm is meeting its ethics and social responsibility goals

Corporate philanthropy

All business donations to nonprofit groups, including money, products, and employee time

Communism

An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government

Recession

An economic downturn marked by a decrease in the GDP for two consecutive quarters

Socialism

An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare

Capitalism

An economic system--also known as the private enterprise or free market system--based on private ownership, economic freedom, and fair competition

World Bank

An international cooperative of 188 member countries, working together to reduce poverty in the developing world

Stakeholders

Any groups that have a stake--or personal interest--in the performance and actions of an organization

Foreign franchising

Authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area

Corporate responsibility

Business contributions to the community through the actions of the business itself rather than donations of money and time

Sustainable development

Doing business to meet the needs of the current generation, without harming the vanity of future generations to meet their needs

Whistle-blower

Employees who report their employer's illegal or unethical behavior to either the authorities or the media

Universal ethical standards

Ethical norms that apply to all people across a broad spectrum of situations

Sarbanes-Oxley Act

Federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms; key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements

Countertrade

International trade that involves the barter of products for products rather than for currency

Quotas

Limitations on the amount of specific products that may be imported from certain countries during a given time period

Structural unemployment

Longer term unemployment; encompasses people who don't have jobs because the economy no longer needs their skills

Exchange rate

Measure the value of one nation's currency relative to the currency of other nations

Tariffs

Taxes levied against imports

Federal reserve

The central bank of the United States

Social responsibility

The obligation of a business to contribute to society

Unemployment rate

The percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment

Equilibrium price

The price associated with the point at which the quantity demanded of a product equals the quantity supplied

Macroeconomics

The study of a country's overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies

Microeconomics

The study of smaller economic units such as individual consumers, families, and individual businesses

Gross Domestic Product (GDP)

The total value of all final goods and services produced within a nation's physical boundaries over a given period of time

Quality control; Social responsibility; policing factories

Three disadvantages to foreign outsourcing

Family; social group; culture

Three factors that influence an individual's ethical choices

Manages US monetary policy Oversees the operation of the 12 federal reserve banks

Two purposes of the Federal Reserve

Frictional unemployment

Unemployment that arrises when you quit your job in order to find a better position that suites you better

Seasonal unemployment

Unemployment that involves job loss related to the time of year

Cyclical unemployment

Unemployment that involves layoffs during recessions

Direct investment

When firms either acquire foreign firms or develop new facilities from the ground up in foreign countries