Ch. 2 Economics Framework for Business

Describe the 4 degrees of competition in our free-market system.

Pure competition is a market structure with many competitors selling virtually identical products. Monopolistic competition is a market structure with many competitors selling differentiated products. Oligopoly is a market structure with only a handful of competitors selling products that can be similar or different. Monopoly single producer dominating the industry, with no room for significant competitors

How did the global crisis unfold?

The banking system hovered on the edge of collapse, property values plummeted, and home foreclosure rates soared. Massive layoffs put more than a million Americans out of work. By the end of the year, the stock market had lost more than a third of its value. To prevent total financial disaster, the federal government and the Federal Reserve intervened in the economy at an unprecedented level by bailing out huge firms that faced total collapse.

What steps did the Federal government and Federal Reserve take to deal with the crisis? Do you agree? what would you have done?

To prevent total financial disaster, the federal government and the Federal Reserve intervened in the economy at an unprecedented level by bailing out huge firms that faced total collapse.

Explain the difference in fiscal and monetary policy

fiscal policy-Government efforts to influence the economy through taxation and spending. monetary policy-Federal Reserve decisions that shape the economy by influencing interest rates and the supply of money.