Economics and Business Impact: U.S. and Global Perspectives

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 at the operation of a nation's economy as a whole.

Microeconomics

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

Resource development

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

Invisible hand

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 privately owned and operated for profit.

State capitalism

A combination of freer markets and some government control.

Four Basic Rights

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

Free market

Decisions about what and how much to produce are made by the market.

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 willing to buy at different prices at a specific time.

Market price

The price determined by supply and demand.

Perfect competition

Many sellers but none is large enough to dictate the price of a product.

Monopolistic competition

Large number of sellers produce very similar products that buyers nevertheless perceive as different.

Oligopoly

A few sellers dominate a market.

Monopoly

One seller controls the total supply of a product or service, and sets the price.

Free-market economies

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

Command economies

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

Gross domestic product (GDP)

The total value of final goods and services produced in a country in a given year.

Unemployment rate

The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.

Frictional unemployment

Refers to those people who have quit work and haven't yet found a new job or are entering the labor force for the first time.

Structural unemployment

Unemployment caused by the restructuring of firms or by a mismatch between the skills of job seekers and the requirements of available jobs.

Cyclical unemployment

Occurs because of a recession or a similar downturn in the business cycle.

Seasonal unemployment

Occurs where demand for labor varies over the year.

Inflation

A general rise in the prices of goods and services over time.

Consumer price index (CPI)

Monthly statistics that measure the pace of inflation or deflation.

Business cycles

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

Fiscal policy

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

National deficit

The amount of money the federal government spends beyond what it collects in taxes for a given fiscal year.