Fundamentals of Business and Economics

Macroeconomics

The study of a country's overall economic dynamics ex. Employment rate and gross domestic products

Monetary policy

Federal reserve decisions that shape the economy by influencing rates and the supply of money

Open Market Operations

The Federal Reserve function of buying and selling government securities ex. Treasury bonds, notes, and bills

Natural monopoly

When one company is a supplier of a product because the NATURE of that product a single supplier is more efficient than multiple competing ones.

Supply curve

The graphed relationship between price and quantity from a supplier standpoint

Demand

The quantity of products that consumers are willing to buy

Contraction

A period of economic downturn marked by rising unemployment and falling business production

Opportunity Cost

Giving up the second-best choice when making a business decision

Balance of payments deficit

Shortfall that occurs when more money flows OUT rather than into a nation

Exchange rate

A measurement of the value of one Nation's currency relative to the currency of other nations

Foreign franchising

A specialized type of foreign licensing in which a firm expands by offering business in other countries with requirements

Direct investment

When firms acquire foreign firms or develop new facilities from the ground up in other countries

General agreement on tariffs and trade (GATT)

International trade treaty designed to encourage worldwide trade among members

World Trade Organization (WTO)

A permanent global institution to promote international trade and to settle international disputes

International Monetary Fund (IMF)

An international organization of 188-member nations that promote international economic operation and a stable growth

Common market

A group of countries that have eliminated tariffs and harmonized trading rules

Consumerism

A social movement that focuses on the right to be safe, informed, choice, and be heard

Corporate philanthropy

All business donations to nonprofit groups

Green marketing

Developing and promoting environmental sound products and practices to gain competitive edge

Noise

Any interference that causes the message you send to be different from the message your audience understands

Intercultural communication

Communication among people with different cultural backgrounds

Communication channels

Various ways a message can be sent ex. Online or in person

Active voice

Sentence construction in which the subject performs the action expressed by the verb

Dynamic delivery

Vibrant, compelling presentation delivery style that grabs the attention of the audience

Standard of Living

The quality/quantity of goods and services available to population

Business environment

The setting in which a business operates which are: economic, competitive, technological, social, and global environments

Speed to market

The speed or rate at which a new product moves from conception to commercialization.

Business technology

Any tools used to enhance business ex. Computer

World Wide Web

The service that allows computers to share and access information

E-commerce

Business transactions online

Demographics

The measurable characteristics of a population ex. Size and density, age, race, etc.

Free Trade

International economic and political movement designed to help goods and services flow freely across boundaries

General Agreement on Tariffs and Trade (GATT)

International trade agreement that has lowered tariffs and promote free trade

Economy

A financial and social system how resources flow through society

Economics

The study of the choices people makes in a society when allocating resources

Microeconomics

The study of smaller economic units such as individual consumers, families, etc.

Fiscal policy

Government efforts to influence the economy through taxation and spending

Budget deficit

Shortfall that occurs when revenue is higher than expenses over a given period of time

Federal debt

The sum of money the federal government has borrowed over the years and not repaid

Commercial banks

Privately owned financial institutions that accept and demand deposits, make loans, and provide other services for the public

Money supply

The total amount of money within the overall economy

Money

Medium of exchange

M1 Money Supply

Includes all currency, paper bills and dollar coins and checks

Federal Deposit Insurance Corporation (FDIC)

A federal agency that insures deposits in banks

Discount rate

The rate of interest that the Federal Reserve charges when it loans funds to banks

Reserve Requirement

A rule set by the FED which indicates the minimum amount of funds a bank must hold

Economic system

A structure for allocating limited resources

Capitalism

An economic system (also known as private enterprise or free market system) based on PRIVATE ownership

Pure Competition

A market structure with many competitors selling virtually identical products

Monopolistic Competition

A market structure with many competitors selling differentiated products (low barrier)

Oligopoly

A market structure with only a handful of competitors of differentiated products (high barrier)

Monopoly

A market structure in which one producer completely dominates the industry leaving no room for competition

Supply

The quality of products that producers are willing to offer for sale

Demand curve

The graphed relationship between price and quantity from a consumer demand standpoint

Equilibrium price

The price at which the quantity demand of a product equals the quantity supplied

Socialism

An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare

Communism

Public ownership of virtually all enterprises under the direction of a strong central government

Mixed economies

Economies that embody elements of both planned and market based economic systems

Privatization

The process of converting government owned business to private ownership

Gross domestic product

The total value of all goods and services produced within a nation's physical boundary

Unemployment rate

The percentage of people in labor force over the age of 16 who do not have jobs and are seeking employment

Business cycle

The periodic contraction and expansion that occur overtime in virtually every economy

Recession

An economic downturn marked by a decrease in the GDP for two consecutive quarters

Depression

A long-lasting recession

Recovery

Time of growth in business

Expansion

A period of economic growth

Hyperinflation

An average monthly inflation rate of more than 50%

Disinflation

A period of slowing average price increases across the economy

Deflation

A period of falling average prices across the economy

Consumer price index (CPI)

A measure of inflation that evaluates the change in the weighted-average prices of goods each month

Produce price index (PPI)

A measure of inflation that evaluates the change overtime

Productivity

Relationship between the production of goods (output) and resources needed to produce (input)

Absolute advantage

The benefit a country has when it can produce more of a product than other countries using the same resources

Comparative advantage

The benefit a country has in each industry if it can make products at a lower cost

Balance of trade

A basic measure of the difference in value between a nation's exports and imports

Trade surplus

Overage that occurs when the total value of nations exports is higher than imports

Trade deficit

Shortfall that occurs when the total value of a nations imports is higher than exports

Balance of payments

A measure of the total flow of money into or out of a country

Balance of payments surplus

Overage that occurs when more money flows INTO a nation rather than out

Countertrade

International trade that involves the barter of products for products rather than currency

Foreign outsourcing

Contract with foreign suppliers to produce products at a fraction of what it costs in that country

Foreign licensing

Authority granted by a domestic firm to a foreign firm for the right to produce/market in that country

Joint venture

When two or more companies JOIN forces sharing resources but not directly merging

Strategic alliance

An agreement between two or more firms to jointly pursue a specific opportunity without merging, less formal

Sociocultural differences

Differences among cultures in languages, attitudes, and values

Infrastructure

A country's physical facilities that support economic activities

Protectionism

National policies designed to restrict international trade to protect domestic business

Tariffs

Tax levied against imports

Quotas

Limitations on the amount of specific products that may be imported from certain countries during a specific time period

Voluntary exports restraints (VER)

Limitations on the AMOUNT of specific productions that one nation will export to another

Embargo

A complete ban on international trade

Free trade

Unrestricted movement of goods and services across international borders

World bank

Countries working together to reduce poverty in the developing world

Trading bloc

Group of countries that have reduced or even eliminated tariffs allowing free flow of goods

North American Free Trade Agreement (NAFTA)

Treaty among the US, Mexico, and Canada that eliminated trade barriers

European Union (EU)

The world's largest common market composed of 28 European nations

Ethics

A set of beliefs about right and wrong

Universal ethical standards

Ethic norms that apply to everyone across a broad spectrum of situations

Business ethics

The application of right and wrong in a business

Ethical dilemma

A decision that involves a conflict of values; every action has consequences