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)