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.