Intro To Business Exam 1

Introduction to business -College Class - Chapter 1 and 3 on OpenStax

barriers to entry

Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm

Business

An organization that strives for a profit by providing goods and services desired by its customers

Business cycles

Upward and downward changes in the level of economic activity 

Capital

The inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer 

Capitalism

An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also known as the private enterprise system 

Circular flow

The movement of inputs and outputs among households, businesses, and governments; a way of showing how the sectors of the economy interact 

Communism

An economic system characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central government planning

Consumer price index (CPI

An index of the prices of a “market basket” of goods and services purchased by typical urban consumers 

Contractionary Policy

The use of monetary policy by the Fed to tighten the money supply by selling government securities or raising interest rates

Cost-Push Inflation

Inflation that occurs when increases in production costs push up the prices of final goods and services 

Costs

Expenses incurred from creating and selling goods and services

Crowding Out

The situation that occurs when government spending replaces spending by the private sector

Cyclical Unemployment

Unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy

Demand

The quantity of a good or service that people are willing to buy at various prices 

Demand Curve

A  A graph showing the quantity of a good or service that people are willing to buy at various prices 

Demand-Pull Inflation

Inflation that occurs when the demand for goods and services is greater than the supply 

Demography

The study of people’s vital statistics, such as their age, gender, race and ethnicity, and location 

Economic Growth

An increase in a nation’s output of goods and services

Economic System

The combination of policies, laws, and choices made by a nation’s government to establish the systems that determine what goods and services are produced and how they are allocated

Economics

The study of how a society uses scarce resources to produce and distribute goods and services. 

Entrepreneurs

People who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal 

Equilibrium

The point at which quantity demanded equals quantity supplied 

Expansionary Policy

The use of monetary policy by the Fed to increase, or loosen, the growth of the money supply

Factors of Production

The resources used to create goods and services

Federal Budget Deficit

The condition that occurs when the federal government spends more for programs than it collects in taxes

Federal Reserve System (The Fed)

The central banking system of the United States

Fiscal Policy

The government’s use of taxation and spending to affect the economy 

Frictional Unemployment

Short-term unemployment that is not related to the business cycle

Full Employment

the condition when all people who want to work and can work have jobs

Goods

Tangible items manufactured by businesses

Gross Domestic Product (GPD)

The total market value of all final goods and services produced within a nation’s borders each year

Inflation

The situation in which the average of all prices of goods and services is rising 

Knowledge

The combined talents and skills of the workforce

Knowledge Workers

Workers who create, distribute, and apply knowledge

Macroeconomics

The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products

Market Structure

The number of suppliers in a market

Microeconomics

The subarea of economics that focuses on individual parts of the economy, such as households or firms

Mixed economics

Economies that combine several economic systems; for example, an economy where the government owns certain industries but others are owned by the private sector

Monetary Policy

A government’s programs for controlling the amount of money circulating in the economy and interest rates

Monopolistic Competition

A market structure in which many firms offer products that are close substitutes and in which entry is relatively easy

National Debt

The accumulated total of all of the federal government’s annual budget deficits

Non-For-Profit Competition

An organization that exists to achieve some goal other than the usual business goal of profit

Oligopoly

A market structure in which a few firms produce most or all of the output and in which large capital requirements or other factors limit the number of firms

Perfect(pure) Competition

A market structure in which a large number of small firms sell similar products, buyers and sellers have good information, and businesses can be easily opened or closed.

Producer Price Index (PPI)

An index of the prices paid by producers and wholesalers for various commodities, such as raw materials, partially finished goods, and finished products

Productivity

The amount of goods and services one worker can produce 

Profit

The money left over after all costs are paid 

Purchasing Power

The value of what money can buy

Pure Monopoly

A market structure in which a single firm accounts for all industry sales of a particular good or service and in which there are barriers to entry

Quality of Life

The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time 

Recession

A decline in GDP that lasts for at least two consecutive quarters

Relationship Management

The practice of building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships

Revenue

The money a company receives by providing services or selling goods to customers 

Risk

The potential to lose time and money or otherwise not be able to accomplish an organization’s goals

Saving Bonds

Government bonds issued in relatively small denominations

Seasonal Unemployment

Unemployment that occurs during specific seasons in certain industries 

Services

Intangible offerings of businesses that can’t be held, touched, or stored 

Socialism

An economic system in which the basic industries are owned either by the government itself or by the private sector under strong government control

Standard of Living

A country’s output of goods and services that people can buy with the money they have 

Strategic Alliance

A cooperative agreement between business firms; sometimes called a strategic partnership 

Structural Unemployment

Unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry or region; not related to the business cycle 

Supply

The quantity of a good or service that businesses will make available at various prices 

Supply Curve

A graph showing the quantity of a good or service that businesses will make available at various prices

Technology

The application of science and engineering skills and knowledge to solve production and organizational problems 

Unemployment Rate

The percentage of the total labor force that is not working but is actively looking for work 

Absolute Advantage

The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product. 

Balance of payments

A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries. 

Balance of Trade

The difference between the value of a country’s exports and the value of its imports during a specific time.  

Buy-National Regulations

Government rules that give special privileges to domestic manufacturers and retailers.  

Contract Manufacturing

The practice in which a foreign firm manufactures private-label goods under a domestic firm’s brand name. 

Countertrade

A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services.  

Devaluation

A lowering of the value of a nation’s currency relative to other currencies

Direct Foreign Investment

Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign country

Dumping

The practice of charging a lower price for a product in foreign markets than in the firm’s home market.  

Embargo

A total ban on imports or exports of a product. 

European Integration

The delegation of limited sovereignty by European Union member states to the EU so that common laws and policies can be created at the European level 

European Union

Trade agreement among 28 European nations

Exchange Controls

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.  

Exporting

The practice of selling domestically produced goods to buyers in another country.  

Exports

Goods and services produced in one country and sold to other countries

Floating Exchange rates

A system in which prices of currencies move up and down based upon the demand for and supply of the various currencies.  

Free Trade

The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions.

Free-Trade Zone

An area where the nations allow free, or almost free, trade among each other while imposing tariffs on goods of nations outside the zone.

G20

Informal group that brings together 19 countries and the European Union—the 20 leading economies in the world.

Global Vision

The ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers.

Import Quota

A limit on the quantity of a certain good that can be imported.

Imports

Goods and services that are bought from other countries. 

Infrastructure

The basic institutions and public facilities upon which an economy’s development depends. 

International Monetary Fund (IMF)

An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations. 

Joint Venture

An agreement in which a domestic firm buys part of a foreign firm or joins with a foreign firm to create a new entity.  

Licensing

 
The legal process whereby a firm agrees to allow another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty.  

Mercosur

Trade agreement between Peru, Brazil, Argentina, Uruguay, and Paraguay.  

multinational corporations

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.  

nationalism

A sense of national consciousness that boosts the culture and interests of one country over those of all other countries.  

North American Free Trade Agreement (NAFTA)

A 1993 agreement creating a free-trade zone including  Canada, Mexico, and the United States.  

outsourcing

Sending work functions to another country, resulting in domestic workers losing their jobs. 

preferential tariff

A tariff that is lower for some nations than for others.  

principle of comparative advantage

The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.  

Protectionism

The policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas.  

protective tariffs

Tariffs that are imposed in order to make imports less attractive to buyers than domestic products are.