Business 101 exam 1

Economics

The study of how wealth is created and distributed.

Microeconomics

The study of the decisions made by individuals and businesses.

Macroeconomics

The study of the national economy and the global economy.

Economy

The way in which people deal with the creation and distribution of wealth.

Factors of production

Inputs and resources used to produce goods and services.

Land and natural resources

Elements used in the production process to make products (e.g., crude oil, forests).

Labor

The time and effort used to produce goods and services (e.g., managers and employees).

Capital

The money, facilities, equipment, and machines used in the operation of organizations.

Entrepreneurship

The activity that organizes land, labor, and capital.

Capitalism

An economic system in which individuals own and operate most businesses.

Invisible hand

A term by Adam Smith describing how personal gain benefits others and the economy.

Laissez-faire

The idea that there should be no government interference in the economy.

Market economy

An economic system where businesses and individuals decide what to produce and buy.

Mixed economy

An economy that exhibits elements of both capitalism and socialism.

Command economy

An economic system where the government decides what goods and services will be produced.

Productivity

The average level of output per worker per hour.

Gross Domestic Product (GDP)

The total dollar value of all goods and services produced within a country during a specified period.

Inflation

A general rise in the level of prices.

Deflation

A general decrease in the level of prices.

Unemployment rate

The percentage of a nation’s labor force unemployed at any time.

Consumer Price Index (CPI)

A monthly index measuring changes in prices of a fixed basket of goods.

Producer Price Index (PPI)

A monthly index measuring prices that producers receive for their finished goods.

Business Cycle

The recurrence of periods of growth and recession in a nation’s economic activity.

Recession

Two or more consecutive three-month periods of decline in a country’s GDP.

Depression

A severe recession lasting longer than a typical recession.

Monetary policies

Federal reserve actions to promote maximum employment and stabilize prices.

Fiscal policy

Government influence on savings and expenditures through tax structure and spending levels.

Federal deficit

A shortfall when the federal government spends more than it receives.

National debt

The total of all federal deficits.

Ethics

The study of right and wrong and the morality of choices individuals make.

Business ethics

The application of moral standards to business situations.

Conflict of interest

When businesspeople take advantage of a situation for personal interest rather than the employer��s.

Plagiarism

Knowingly taking someone else’s words or ideas without acknowledgment.

Whistle-blowing

Informing authorities about unethical practices within an organization.

Code of ethics

A guide to acceptable and ethical behavior as defined by an organization.

Social responsibility

The belief that businesses should help society.

Affirmative Action program

A plan designed to increase the number of employees from underrepresented groups.

Exporting

Selling and shipping raw materials or products to other nations.

Importing

Purchasing raw materials or products from other nations.

Balance of Trade

The total value of a nation’s exports minus the total value of imports.

Licensing

A contractual agreement allowing one firm to produce and market another's product.

Joint Venture

A partnership formed to achieve a specific goal.

Tariff

A tax levied on a particular foreign product entering a country.

Import quota

A limit on the amount of a particular good that can be imported.

Embargo

A complete halt to trading with a nation.