Economics Fundamentals

• Study notes on key business and economics concepts from the provided text.

Barriers to Entry

• Conditions, either technological or legal, that prevent new companies from fairly competing with existing ones.

Business

• An organization aiming for profit by providing goods and services desired by consumers.

Business Cycles

• Fluctuations in economic activity, involving both upward and downward changes.

Capital

• Inputs like tools, machinery, equipment, and buildings used for producing goods and services and delivering them to customers.

Capitalism

• An economic system characterized by marketplace competition and private ownership of production factors, also known as the private enterprise system.

Circular Flow

• The movement of inputs and outputs involving households, businesses, and governments to illustrate economic interaction.

Communism

• An economic system with government ownership of resources, control of markets, and central planning for economic decisions.

Consumer Price Index (CPI)

• Measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Contractionary Policy

• The Federal Reserve's use of monetary policy to reduce the money supply by selling government securities or raising interest rates.

Cost-Push Inflation

• Inflation driven by increases in production costs, leading to higher prices for final goods and services.

Costs

• Business expenses resulting from the creation and sale of goods and services.

Crowding Out

• A situation when government spending substitutes or replaces spending by the private sector.

Cyclical Unemployment

• Unemployment caused by a downturn in the business cycle, reducing the demand for labor.

Demand

• The quantity of a good or service that people are willing to purchase at various prices.

Demand Curve

• A graph that illustrates the relationship between the quantity of a good or service consumers are willing to buy and its price.

Demand-Pull Inflation

• Inflation that happens when demand for goods and services exceeds the available supply.

Demography

• The statistical study of human populations, including vital information like age, gender, race, ethnicity, and location.

Economic Growth

• A rise in a nation’s production of goods and services.

Economic System

• A nation's approach to organizing and distributing resources, defining what is produced and how it's allocated.

Economics

• How society uses limited resources to produce and distribute goods and services.

Entrepreneurs

• Individuals who combine natural resources, labor, and capital to produce goods or services, aiming for profit or a not-for-profit objective.

Equilibrium

• The point where the quantity demanded equals the quantity supplied.

Expansionary Policy

• The Federal Reserve's use of monetary policy to increase, or loosen, the growth of the money supply.

Factors of Production

• The resources, including natural resources, labor, capital, and entrepreneurship, used to make goods and services.

Federal Budget Deficit

• Occurs when the federal government's spending exceeds its tax revenue.

Federal Reserve System (The Fed)

• The central banking system of the United States.

Fiscal Policy

• The government’s utilization of taxation and spending measures to influence the economy.

Frictional Unemployment

• Temporary unemployment not related to the business cycle.

Full Employment

• When nearly all who are willing and able to work have jobs.

Goods

• Physical, tangible items produced by businesses.

Gross Domestic Product (GDP)

• The total market value of all final goods and services produced within a country in a year.

Inflation

• An increase in the average prices of goods and services over time.

Knowledge

• The combined skills and talents of the workforce.

Knowledge Workers

• Employees focused on creating, distributing, and applying knowledge.

Macroeconomics

• The branch of economics that studies the behavior and performance of an economy as a whole.

Market Structure

• The characteristics of a market that defines the number and size of sellers.

Microeconomics

• Focuses on the economic behavior of individuals, households, and firms.

Mixed Economies

• Economic systems combining elements of different types of economies.

Monetary Policy

• Government actions to manage the money supply and interest rates.

Monopolistic Competition

• Market structure with numerous firms offering similar but not identical products, and relatively easy entry.

National Debt

• The total accumulation of the federal government's annual budget deficits.

Not-for-Profit Organization

• A group that exists for purposes other than making a profit.

Oligopoly

• A market dominated by a few large firms due to high capital requirements or other limiting factors.

Perfect (Pure) Competition

• A market where many small firms sell identical products, with easy entry and exit, and good information for buyers and sellers.

Producer Price Index (PPI)

• An index measuring price changes for goods sold by domestic producers.

Productivity

• The amount of goods and services a worker can produce.

Profit

• Business revenue minus all costs.

Purchasing Power

• The amount of goods and services that can be bought with a unit of currency.

Pure Monopoly

• A market where one firm controls the entire market for a product or service, with high barriers to entry.

Quality of Life

• A measure of well-being based on factors like life expectancy, education, health, and leisure time.

Recession

• A decline in GDP lasting at least two quarters.

Relationship Management

• Developing and maintaining interactions with customers to foster long-term satisfaction through mutually beneficial partnerships.

Revenue

• The income a company earns from selling goods or services.

Risk

• The potential for financial loss or inability to achieve organizational goals.

Savings Bonds

• Low-denomination government bonds.

Seasonal Unemployment

• Unemployment linked to specific times of the year or industries.

Services

• Intangible offerings of businesses.

Socialism

• An economic system where basic industries are government-owned or strongly controlled.

Standard of Living

• The level of wealth, comfort, material goods, and necessities available to people in a specific geographic area.

Strategic Alliance

• A cooperative agreement or partnership between companies.

Structural Unemployment

• Unemployment arising from a mismatch between available jobs and workers' skills.

Supply

• The quantity of a good or service that businesses will offer at different prices.

Supply Curve

• A graph showing the quantity of a good or service businesses will supply at various prices.

Technology

• Applying scientific and engineering knowledge to solve production and organizational challenges.

Unemployment Rate

• The percentage of the labor force that is jobless, but actively seeking employment.

Code of Ethics

• A set of principles designed to guide employees in making decisions that align with the organization's values and standards.

Corporate Philanthropy

• Charitable activities undertaken by corporations, including donations and support for employee volunteerism.

Corporate Social Responsibility (CSR)

• A business's commitment to the overall welfare of society, going beyond legal and contractual obligations.

Deontology

• An ethical theory that upholds moral duties and obligations as inherently right, regardless of consequences.

Ethical Issue

• A situation requiring a decision between actions that could be considered ethical or unethical.

Ethics

• Moral standards used to judge right and wrong.

Justice

• The concept of fairness, reflecting societal standards for equitable distribution of benefits and burdens.

Social Investing

• Investment strategies that consider ethical and social criteria, encouraging socially responsible corporate behavior.

Stakeholders

• Any individuals or groups with an interest in a business’s operations, including employees, customers, and the public.

Strategic Giving

• Corporate philanthropy that is aligned with a company's mission and benefits the communities in which it operates.

Utilitarianism

• The ethical philosophy that actions are right if they promote the greatest good for the greatest number of people.

Acquisition

• The purchase of one company by another, often negotiated with the target company’s board.

Board of Directors

• A group elected by stockholders to oversee a corporation’s management and set major policies.

Buyer Cooperative

• Members combine purchasing power.

C Corporation

• The standard form of corporate organization.

Conglomerate Merger

• The joining of companies in unrelated industries to diversify risk.

Cooperative

• A business owned and operated for the benefit of those using its services.

Corporation

• A legal entity separate from its owners, with the ability to own property, enter contracts, and conduct business.

Franchise Agreement

• The contract between a franchisor and franchisee.

Franchisee

• The individual or company that sells the goods or services of the franchisor.

Franchising

• A business arrangement where a franchisor provides a product or service concept, allowing a franchisee to operate under the franchisor's brand.

Franchisor

• The company that provides the product or service concept in a franchise arrangement.

General Partners

• Partners with unlimited liability who manage a partnership.

General Partnership

• A business owned and operated by two or more individuals who share in the management and profits, with each bearing unlimited liability.

Horizontal Merger

• A business combination of firms in the same industry and stage of production aiming to reduce costs or competition.

Joint Venture

• An alliance between two or more companies for a specific project and time period.

Leveraged Buyout (LBO)

• A corporate takeover financed by borrowed funds.

Limited Liability Company (LLC)

• A business structure offering the liability protection of a corporation.

Limited Partners

• Partners with liability limited to their investment, who do not participate in management.

Limited Partnership

• A partnership with both general partners (unlimited liability) and limited partners (liability limited to their investment).

Merger

• The combination of two or more companies into a single entity.

Partnership

• A business owned by two or more people.

S Corporation

• A corporation taxed like a partnership.

Seller Cooperative

• Producers that collaborate to compete more effectively with larger producers.

Sole Proprietorship

• A business owned and run by one person.

Stockholders (or Shareholders)

• The owners of a corporation.

Vertical Merger

• The fusion of companies at different production stages within the same industry.

Test your knowledge of core economic principles. Questions cover barriers to entry, circular flow, monetary policy, inflation, demographic trends, scarcity, capitalism, and unemployment.