Midterm #1 Business Key Words

brain drain

The loss of the best and brightest people to other countries.

business

Any activity that seeks to provide goods and services to others while operating at a profit.

business cycles

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

business environment

The surrounding factors that either help or hinder the development of businesses.

capitalism

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.

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.

communism

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.

consumer price index (CPI)

Monthly statistics that measure the pace of inflation or deflation.

core inflation

CPI minus food and energy costs.

deflation

A situation in which prices are declining.

demand

The quantity of products that people are willing to buy at different prices at a specific time.

demography

The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.

depression

A severe recession, usually accompanied by deflation.

disinflation

A situation in which price increases are slowing (the inflation rate is declining).

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.

entrepreneur

A person who risks time and money to start and manage a business.

factors of production

The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.

fiscal policy

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

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.

goods

Tangible products such as computers, food, clothing, cars, and appliances.

gross domestic product (GDP)

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

inflation

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

invisible hand

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.

Keynesian economis theory

The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.

loss

When a business’s expenses are more than its revenues.

macroeconomics

The part of economics study that looks at the operation of a nation’s economy as a whole.

market price

The price determined by supply and demand.

microeconomics

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

mixed economies

Economic systems in which some allocation of resources is made by the market and some by the government.

monetary policy

The management of the money supply and interest rates by the Federal Reserve Bank.

monopolistic competition

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.

monopoly

A degree of competition in which only one seller controls the total supply of a product or service, and sets the price.

national debt

The sum of government deficits over time.

nonprofit organization

An organization whose goals do not include making a personal profit for its owners or organizers.

oliogopoly

A degree of competition in which just a few sellers dominate the market.

perfect competition

The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.

producer price index (PPI)

An index that measures the change in prices at the wholesale level.p

productivity

The amount of output you generate given the amount of input (e.g., hours worked).

profit

The amount of money a business earns above and beyond what it spends for salaries and other expenses.

recession

Two or more consecutive quarters of decline in the GDP.

resource development

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

revenue

The total amount of money a business takes in during a given period by selling goods and services.

risk

(1) The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. (2) The chance of loss, the degree of probability of loss, and the amount of possible loss.

services

Intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.

socialism

An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.

stagflation

A situation when the economy is slowing but prices are going up anyhow.

stakeholders

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

standard of living

The amount of goods and services people can buy with the money they have.

supply

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.

technology

Everything from phones to computers, mobile devices, wearable electronics, medical imaging machines, robots, artificial intelligence, genomic vaccines, the Internet, social media, and the various software programs that make business processes more effective, efficient, and productive.

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.