RSM100 Chapter 1, 2

balanced budget

a situation in which total revenues raised and fees equal the total proposed spending for the year.

budget

an organization’s plan for how it will raise and spend money during a given period of time.

budget deficit

a situation in which the government spends more than the amount it raises through taxes and fees.

budget surplus

excess funding that occurs when the government spends less than the amount of funds raised through taxes and fees.

communism

an economic system in which all property is shared equally by the people of a community under the direction of a strong central government.

Consumer Price Index (CPI)

a measurement of the monthly average change in prices of goods and services.

core inflation rate

the inflation rate of an economy after energy and food prices are removed.

cyclical unemployment

people who are out of work because of a cyclical contraction in the economy

deflation

the opposite of inflation; occurs when prices continue to fall.

demand

the willingness and ability of buyers to purchase goods and services at different prices.

demand curve

a graph of the amount of a product that buyers will purchase at different prices.

economics

a social science that analyzes the choices people and governments make in allocating scarce resources.

equilibrium

price the current market price for an item.

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.

fiscal policy

government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.

frictional unemployment

applies to members of the workforce who are temporarily not working but are looking for jobs.

gross domestic product (GDP)

the sum of all goods and services produced within a country’s borders during a specific time period, such as a year.

hyperinflation

an economic situation characterized by soaring prices.

inflation

an 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.

macroeconomics

the study of a nation’s overall economic issues, such as how an economy maintains and divides up resources and how a government's policies affect its citizens’ standards of living.

microeconomics

the study of small economic units, such as individual consumers, families, and businesses.

mixed market economies

economic systems that draw from both types of economies, to different degrees.

monetary policy

government actions to increase or decrease the money supply and to change banking requirements and interest rates to influence bankers’ willingness to make loans.

monopolistic competition

a market structure in which large numbers of buyers and sellers exchange heterogeneous products, so each participant has some control over price.

monopoly

a market situation in which a single seller dominates trade in a good or service for which buyers can find no close substitutes.

national debt

money owed by the government to individuals, businesses, and government agencies who purchase Treasury bills, Treasury notes, and Treasury bonds sold to cover expenditures.

planned economy

an economic system in which government controls determine business ownership, profits, and resource allocation to accomplish government goals rather than those set by individual firms.

privatization

the conversion of government owned and operated companies to privately held businesses.

Producer Price Index (PPI)

a measurement of the average change in prices of goods and services received by domestic producers.

productivity

the relationship between the number of units produced and the number of human and other production inputs necessary to produce them

pure competition

a market structure in which large numbers of buyers and sellers exchange homogeneous products and no single participant has a significant influence on price.

quantitative easing

an expansionary monetary policy whereby a central bank buys back predetermined amounts of government bonds or other financial assets to increase liquidity and stimulate the economy.

recession

a cyclical economic contraction that lasts six months or longer.

regulated monopoly

a market situation in which a local, provincial, or federal government grants exclusive rights in a certain market to a single firm.

restrictive monetary policy

government actions to reduce the money supply to curb rising prices, overexpansion, and concerns about overly rapid economic growth.

seasonal unemployment

joblessness of workers in a seasonal industry

socialism

an economic system characterized by government ownership and operation of 78. major industries, such as communications.

structural unemployment

people who remain unemployed for long periods of time, often with little hope of finding new jobs like their old ones.

supply

the willingness and ability of sellers to provide goods and services at different prices.

supply curve

a graph that shows the relationship between different prices and the amount of goods that sellers will offer for sale regardless of demand.

unemployment rate

the percentage of the total workforce actively seeking work but currently unemployed.

brand

d a name, term, sign, symbol, design, or some combination that identifies the products of one firm and shows how they differ from competitors’ offerings.

branding

the process of creating in consumers’ minds an identity for a good, service, or company; a major marketing tool in contemporary business

business

all profit seeking activities and enterprises that provide goods and services necessary to an economic system.

capital

l production inputs consisting of technology, tools, information, and physical facilities.

capitalism

m an economic system that rewards firms for their ability to perceive and serve the needs and demands of consumers; also called the private enterprise system.

competition

the battle among businesses for consumer acceptance.

competitive differentiation

the unique combination of organizational abilities, products, and approaches that sets one company apart from its competitors in the minds of customers.

consumer orientation

a business philosophy that focuses first on consumers’ unmet wants and needs, and then designs products to meet those needs

creativity

the capacity to develop novel solutions to perceived organizational problems.

critical thinking

the ability to analyze and assess information to pinpoint problems or opportunities.

diversity

the blending of individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities to enhance a firm’s chances of success.

entrepreneur

a person who seeks a profitable opportunity and takes the necessary risks to 109. set up and operate a business

entrepreneurship

the willingness to take risks to create and operate a business. factors of production four basic inputs for effective economic operation natural resources, capital, human resources, and entrepreneurship.

human resources

production inputs consisting of anyone who works, including both the physical labour and the intellectual inputs contributed by workers.

natural resources

all production inputs that are useful in their natural states, including agricultural land, building sites, forests, and mineral deposits.

nearshoring

the outsourcing of production or services to locations near a firm’s home base.

not for-profit organizations

s organizations whose primary aims are public service, not returning a profit to their owners.

offshoring

the relocation of business processes to lower cost locations overseas

outsourcing

using outside vendors to produce goods or fulfill services and functions that were previously handled in house

private enterprise system

an economic system that rewards firms for their ability to identify and serve the needs and demands of customers.

private property

the most basic freedom under the private enterprise system; the right to own, use, buy, sell, and hand down land, buildings, machinery, equipment, patents, individual possessions, and various intangible kinds of property.

profits

rewards for business people who take the risks involved in offering goods and services to customers.

relationship era

the business era where firms seek to actively promote customer loyalty by carefully managing every interaction

relationship management

the collection of activities that build and maintain ongoing, mutually beneficial ties with customers and other parties.

social era

the business era in which firms seek ways to connect and interact with customers using technology.

strategic alliance

a partnership formed to create a competitive advantage for the businesses involved; in international business, a business strategy in which a company finds a partner in the country where it wants to do business

transaction management

building and promoting products in the hope that enough customers will buy them to cover costs and earn profits.

vision

the ability to perceive marketplace needs and what an organization must do to satisfy them.