Business Chapter 3 and 4
Social science that analyzes the choices that individuals, groups, and governments make in allocating scarce resources.
study of small economic units, such as individual consumers, families, and businesses.
study of a nation's overall economic issues, such as how an economy uses its resources and how national governmental policies affect people's standard of living.
willingness and ability of buyers to purchase goods and services at different prices.
amount of goods and services for sale at different prices.
graph of the amount of a product that buyers will purchase at different prices.
graph that shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand.
prevailing market price at which you can buy an item.
market structure in which large numbers of buyers and sellers exchange homogenous products and no single participant can significantly influence price.
market structure in which large numbers of buyers and sellers exchange heterogeneous products so each participant has some control over price.
market situation in which relatively few sellers compete and high start-up costs serve as barriers to new competitors.
market situation in which a single seller dominates trade of a good or service for which buyers can find no close substitutes.
market situation in which a local, state, or federal government grants exclusive rights in a certain market to a single firm.
economic system in which government controls determine business ownership, profits, and resource allocation to accomplish government goals rather than those set by individual firms.
economic system characterized by government ownership and operation of major industries such as communications.
economic system in which all property would be shared equally by the people of a community under the direction of a strong central government.
Mixed Market Economy
economic system that mixes both private enterprise systems and planned economies.
conversion of government-owned and operated companies into privately held businesses.
cyclical economic contraction that lasts for six months or longer.
prolonged recession or one that causes a significant drop in GDP
relationship between the goods and services produced in a nation each year and the inputs needed to produce them.
Gross Domestic Product
sum of all goods and services produced within a country's boundaries.
economic situation characterized by rising prices caused by a combination of excess consumer demand and increases in the costs of raw materials, component parts, human resources, and other factors of production.
occurs when prices continue to fall.
Consumer Price Index
measurement of the monthly average change in prices of goods and services.
percentage of the total workforce actively seeking work but are currently unemployed.
experienced by member of the workforce who are temporarily not working but are looking for jobs.
people who are out of work due to contraction in the economy.
people who remain unemployed for long periods of time, often with little hope of finding a new job like their old one.
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, overexpansion, and concerns about overly rapid economic growth.
government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general standard of living, and encourage economic growth.
organization's plan for how it will raise and spend money during a given period of time.
situation in which the government spends more than the amount of money it raises through taxes.
money owed by government to individuals, businesses, and government agencies who purchase Treasury bills, Treasury notes, and Treasury bonds sold to cover expenditures.
excess funding that occurs when government spends less than the amount of funds raised through taxes and fees.
situation in which total revenues raised by taxes equal the total proposed spending for the year.
The ability to produce more goods using fewer resources than other providers.
the ability to produce one good at a relatively lower opportunity cost than other goods.
the highest valued alternative forgone in the pursuit of an activity.
Balance of Trade
difference between a nation's exports and imports.
the positive difference between what a country exports compared to what it imports.
the negative difference between what a country exports compared to what it imports.
Balance of Payments
overall flow of money into of out of a country
the rate at which a nation's currency can be exchanged for the currencies of other nations.
drop in a currency's value relative to other currencies or to a fixed standard.
tax, surcharge, or duty on foreign products.
limit set on the amounts of particular products that countries can import during specified time periods.
selling products abroad at prices below production costs or below typical prices in the home market to capture market share from domestic competitors.
total ban on importing specific products or a total halt to trading with a particular country.
General Agreement on Tariffs and Trade
international trade accord that substantially reduced worldwide tariffs and other trade barriers.
World Trade Organization
153-member international institution that monitors GATT agreements and mediates international trade disputes.
organization established by industrialized nations to lend money to less developed countries.
International Monetary Fund
organization created to promote trade, eliminate barriers, and make short-term loans to member nations that are unable to meet their budgets.
North American Free Trade Agreement
agreement among the United States, Canada, and Mexico to break down tariffs and trade restrictions.
Central American-Dominican Republic Free Trade Agreement
agreement among the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua to reduce tariffs and trade restrictions.
28-nation European economic alliance.
international agreement that involves hiring local companies to produce, distribute, or sell goods or services in a specific country or geographic region.
partnership between companies formed for a specific undertaking.
firm with significant operations and marketing activities outside its home country.
Core inflation rate
an economy's inflation rate after food and energy prices are removed.
asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve.
The purchase or acquisition of a controlling interest in a foreign business by means other than the outright purchase of shares.