business 2

economics

the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.

macroeconomics

the part of economics study that looks the operation of a nation's economy as a whole.

microeconomics

the part of economics study that looks at the behavior of people and organization in particular markets.

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

resource developement

the study of how to increase resources and to create the conditions that will make better use of those resources.

invisible hand

a phrase coined by Adam Smith to describe the process that turns self directed gain into social and economic benefits for all.

capitalism

an economic system in which all or most of the factors of production and distribution are pricately owned and operated for profit.

the fundations of capitalism

1 the right to own private property,2 to own a business and keep all that business's profits,3 to freedon of competition,4 to freedom of choice.

supply

the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.

demand

the quantity of products that people are will to buy at different prices at a specific time.

market price

is dertermined by supply and demand. it is the price toward which the market will trend.

the equilibrium point

the place where quantlty demanded and supplied meet

four different degree of competition

1perfect competition2 monopolistic3 oligopoly4 monopoly

perfect competition

exists when there are many sellers in a market and none is large enough to dictate the price of a product.

monopolistic competition

a large number of sellers produce very similar products that buyers neverherless perceive as different, such as hot dogs, sodas, personal computers, and T-shirts.

oligopoly

is a degree of competition in which just a few sellers dominate a market, as we see in tobacco,gasoline, automobiles, aluminum aircraft

monopoly

occurs when one seller controls the total supply of a product or service, and sets the price. in the US laws prohibit the creation of monopolies.

socialism

an economic system based on the premise that some, if not most, basic businesses should owned by the government to that profits can be more evenly distributed among the people.

benefits of socialism

the major benefits of socialism is supposed to be social equality

the negative consequences of socialism

this loss of the best and brightest people to other countries is called a brain drain.?????????

communism

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production

free-market economic

economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grow.

command economics

economic system in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.

mixed economies

exist where some allocation of resources is made by the market and some by the goverment.

GDP gross domestic product

the total value of final goods and services produced in a country in a given year.US $14 trillion

3 indicators of economic conditions

1 the gross domestic product2 the unemployment3 price indexes

unemployment rate

refers to the percentage of civillians at least 16 years old who are unemployed and tried to find a job whthin the prior four weeks.

frictional unemployment

quit work, unemployment that occurs when people take time to find a job

structural unemployment

skill or location

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves

seasonal unemployment

unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season

inflation

a general risse in the prices of goods and services over time

disinflation

a situation in which price increases are slowing the inflation rate is decling

deflation

a situation in which price are declining

stagflation

a situation when the economy is slowing but prices are going up anyhow

CPI consumer price index

monthly statistics that measure the pace of inflation or deflation

PPI producer price index

an index that measures prices at the wholesale level

business cycles

the periodic rises and falls that occur in economies over time.

recession

two or more consecutive quarters of decline in the GDP

depression

a severe recession, usually accompanied by deflation.

fiscal policy

the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.

taxation

the practice of requiring people to pay taxes to support a government

deficit

the property of being an amount by which something is less than expected or required??

national debt

the sum of government deficits over time

keynesian economic theory

the theory that a government policy of increasing spending or cutting taxes could stimulate the economy in a recession

monetary policy

the management of the money supply and interest rates by the Federal Reserve Bank

major tool for managing US economy

fiscal policy(government taxes and spending)
monetary policy (the Fed's control over interest rates and the money supply)

what are the two branches of economics

major branches of economics: macroeconomics studies and microeconomics.

Adam Smith

-Ahead of his time- Father of Modern Economics
- Coined the "Invisible Hand" theory 1776
<inquiry into the Nature and Causes the wealth of nation>

inflation and price indexes

price indexes help gauge the health of the economy by measuring the levels of inflation, disinflation,deflation,and stagflation.