Introduction to Business and Economics Vocabulary

Vocabulary flashcards derived directly from lecture transcript notes covering introductory business concepts, economic systems, economic indicators, and types of competition.

Cultural Diversity

A system that recognizes and respects the differences among people.

Business

The organized effort of individuals to produce and sell for a profit the goods and services that satisfy society's needs.

Profit

What remains after every expense is paid.

Stakeholders

All the different people who touch a business and are affected by its policies, decisions, and activities.

Economics

The study of how wealth is created and distributed.

Macroeconomics

The study of the national economy.

Microeconomics

The study of decisions made by individuals and businesses.

Economy

The way in which people deal with the creation and distribution of wealth.

Factors of Production

The inputs and resources used to produce goods and services, including land, labor, capital, and entrepreneurship.

Labor

The time and effort of the people used to produce goods and services, such as managers and employees.

Capital

Money, facilities, equipment, and machines used in operations.

Entrepreneurship

The activity that organizes all resources, labor, and capital.

Entrepreneur

A person who risks their time, effort, and money to start and operate a business.

Capitalism

An economic system in which individuals own and operate a majority of the businesses that provide goods and services.

Invisible Hand

A term created by Adam Smith to describe how an individual's own personal gain benefits others and the nation's economy.

Laissez Faire

A concept created by Adam Smith implying that there should be no government interference in the economy.

Command Economy

An economic system in which the government decides what goods and services will be produced, how they are going to be produced, and who is going to produce them.

Productivity

The average level of output per worker per hour.

Gross Domestic Product (GDP)

The total dollar value of all goods and services produced by all people within the boundaries of a country during a specified period of time.

Inflation

The general rise in the level of prices.

Deflation

The decrease in the level of prices.

Unemployment Rate

The percentage of the nation's labor force unemployed at a given time.

Consumer Price Index (CPI)

The monthly index that measures changes in prices of a fixed basket of goods purchased by a typical consumer.

Producer Price Index (PPI)

The monthly index that measures prices that producers receive for their goods.

Business Cycle

A recurrence of periods of growth and recession in a nation's economic activity.

Monetary Policies

The Federal Reserve's actions to promote maximum employment, stabilize prices, and increase or decrease interest rates.

Fiscal Policy

Government influence on savings and expenditures accomplished by altering the tax structure and changing levels of government spending.

Perfect or Pure Competition

A market situation in which there are many buyers and sellers of a product and no single buyer or seller is powerful enough to affect the price.

Supply

The quantity of a product that producers are willing to sell at each of various prices.

Demand

The quantity of a product that buyers are willing to purchase at each of various prices.

Market Price

The price of any product at which the quantity demanded is exactly equal to the quantity supplied.