Economics Fundamentals

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Chapter 1

• Barriers to entry are conditions, such as technological or legal factors, that prevent new companies from fairly competing with existing ones.
• A business is an organization aiming to make profit by offering goods and services that are desired by customers.
• Business cycles refer to the fluctuations, both upward and downward, in the level of economic activity.
• Capital includes tools, machinery, equipment, and buildings. They are used to produce goods and services and distribute them to customers.
• Capitalism, also known as the private enterprise system, is an economic system characterized by marketplace competition and private ownership of production factors.
• Circular flow describes the movement of inputs and outputs between households, businesses, and governments. It illustrates how different sectors of the economy interact.
• Communism is an economic system defined by government ownership of nearly all resources, government control over all markets, and central planning for economic decisions.
• The Consumer Price Index (CPI) measures the prices of a typical basket of goods and services bought by urban consumers.
• Contractionary policy is when the Federal Reserve uses monetary policy and sells government securities or raises interest rates to tighten the money supply.
• Cost-push inflation happens when rising production costs increase the prices of final goods and services.
• Costs are the expenses incurred when creating and selling goods and services.
• Crowding out occurs when government spending substitutes for spending by the private sector.
• Cyclical unemployment happens when a downturn in the business cycle reduces the demand for labor in the economy.
• Demand is the quantity of a good or service that people are willing to purchase at different prices.
• A demand curve is a graph that illustrates the quantity of a good or service people are willing to buy at different prices.
• Demand-pull inflation occurs when the demand for goods and services exceeds the available supply.
• Demography is the study of vital human statistics such as age, gender, race, ethnicity, and location.
• Economic growth is an increase in a country's production of goods and services.
• An economic system is a combination of policies, laws, and choices made by a nation's government to determine what goods and services are produced and how they are distributed.
• Economics is the study of how society uses limited resources to produce and distribute goods and services.
• Entrepreneurs combine natural resources, labor, and capital to produce goods or services, aiming to make a profit or achieve a not-for-profit objective.
• Equilibrium is the point where the quantity demanded equals the quantity supplied.
• Expansionary policy is when the Federal Reserve uses monetary policy to increase, or loosen, the growth of the money supply.
• Factors of production are the resources used to create goods and services.
• A federal budget deficit occurs when the federal government's spending on programs exceeds its tax revenues.
• The Federal Reserve System (The Fed) is the central banking system of the United States.
• Fiscal policy refers to the government's use of taxation and spending to influence the economy.
• Frictional unemployment is short-term unemployment not related to the business cycle.
• Full employment is the condition in which nearly everyone who wants a job and is capable of working has one.
• Goods are physical items produced by businesses.
• Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a nation's borders in a year.
• Inflation is a situation where the average price of goods and services is rising.
• Knowledge is the combined skills and talents of the workforce.
• Knowledge workers are workers who create, distribute, and apply knowledge.
• Macroeconomics is a subarea of economics that focuses on the economy as a whole, using aggregate data from large groups of people, companies, or products.
• Market structure refers to the number of suppliers in a market.
• Microeconomics is a subarea of economics that focuses on individual parts of the economy, like households or firms.
• Mixed economies combine elements of multiple economic systems, such as government ownership of certain industries alongside private sector ownership.
• Monetary policy consists of government programs that oversee the amount of money circulating in the economy and interest rates.
• Monopolistic competition is a market structure where many firms offer similar products, and entry is relatively easy.
• National debt is the total accumulation of all federal government annual budget deficits.
• A not-for-profit organization exists to achieve a mission other than making a profit.
• Oligopoly is a market structure dominated by a few firms that produce most or all of the output. Large capital requirements or other factors limit the number of firms.
• Perfect (pure) competition is a market structure characterized by a large number of small firms selling similar products, where buyers and sellers have good information, and businesses can easily enter or exit.
• Producer Price Index (PPI) measures the prices paid by producers and wholesalers for various commodities, including raw materials, partially finished goods, and finished products.
• Productivity is the amount of goods and services a worker can produce.
• Profit is the money remaining after all costs have been paid.
• Purchasing power is the value of what money can buy.
• Pure monopoly is a market structure where a single firm accounts for all industry sales of a particular good or service. Significant barriers to entry exist.
• Quality of life is the overall level of happiness based on factors such as life expectancy, education standards, health, sanitation, and leisure time.
• Recession is a decline in GDP lasting for at least two consecutive quarters.
• Relationship management is the practice of building, maintaining, and improving interactions with customers and other parties to foster long-term satisfaction through mutually beneficial partnerships.
• Revenue is the money a company earns by providing services or selling goods to customers.
• Risk is the potential to lose time and money or fail to achieve an organization's goals.
• Savings bonds are government bonds issued in small denominations.
• Seasonal unemployment occurs during specific seasons in certain industries.
• Services are intangible offerings of businesses that cannot be held, touched, or stored.
• Socialism is an economic system where basic industries are owned by the government or the private sector under strong government control.
• Standard of living is a country's output of goods and services that people can buy with their money.
• A strategic alliance, sometimes called a strategic partnership, is a cooperative agreement between business firms.
• Structural unemployment is caused by a mismatch between available jobs and the skills of available workers, unrelated to the business cycle.
• Supply represents the quantity of a good or service that businesses will make available at various prices.
• A supply curve is a graph depicting the quantity of a good or service that businesses will make available at various prices.
• Technology involves applying scientific and engineering skills to solve production and organizational problems.
• The unemployment rate is the percentage of the total labor force that is not working but is actively seeking employment.

Chapter 2

• A code of ethics provides guidelines for employees regarding expected behavior towards colleagues, customers, and suppliers.
• Corporate philanthropy involves charitable giving by corporations, including cash contributions, equipment donations, product donations, and support for employee volunteerism.
• Corporate Social Responsibility (CSR) reflects a business's concern for the well-being of society. This includes obligations beyond legal and contractual requirements.
• Deontology is a philosophy where individuals adhere to obligations to individuals or society, as upholding duty is considered ethically correct.
• An ethical issue arises when a person must choose between actions that may be ethical or unethical.
• Ethics are moral standards for judging whether something is right or wrong.
• Justice is what society deems fair, involving equitable distribution of benefits and burdens.
• Social investing limits investments to companies that align with the investor's ethical and social responsibility beliefs, encouraging socially responsible behavior.
• Stakeholders are individuals or groups to whom a business is responsible, including employees, customers, the public, and investors.
• Strategic giving aligns philanthropic and CSR efforts with a company's mission, targeting donations to communities where the company operates.
• Utilitarianism assesses actions based on their consequences, deeming actions morally wrong if they adversely affect the majority.

Chapter 4

• An acquisition involves one company purchasing another, often negotiated with the target company's board of directors.
• A board of directors is a group elected by stockholders to manage a corporation. This involves setting goals, policies, hiring officers, and overseeing operations/finances.
• A buyer cooperative is a group of members uniting to increase their purchasing power.
• A C corporation is a standard form of corporate organization.
• A conglomerate merger combines companies in unrelated businesses to reduce risk.
• A cooperative is a legal entity formed by people with similar interests, such as suppliers or customers, to cut costs and gain economic power. It features limited liability, unlimited lifespan, a board of directors, and distributes profits to member-owners based on their contributions.
• A corporation is a separate legal entity from its owners, offering them protection from personal liability for the entity's debts. It can own property, enter contracts, and conduct business under its charter.
• A franchise agreement outlines the terms of a franchising arrangement, including rules for running the franchise, services provided by the franchisor, and financial terms. It allows the use of the franchisor’s business name, trademark, and logo
• A franchisee is an individual or company that sells the goods or services of the franchisor in a specific area.
• Franchising is based on an arrangement between a franchisor, who provides the business concept, and a franchisee, who sells the goods/services in a specific area.
• A franchisor provides the product or service concept to the franchisee in a franchising arrangement.
• General partners have unlimited liability for the firm’s obligations and control its operations.
• A general partnership involves all partners sharing in management and profits, with each partner able to act on behalf of the firm and having unlimited liability for business obligations.
• A horizontal merger combines companies at the same stage in the same industry to reduce costs, expand product offerings, or reduce competition.
• A joint venture happens when two or more companies form an alliance to pursue a specific project, usually for a limited time.
• A leveraged buyout (LBO) is a corporate takeover financed by borrowing heavily and can be initiated by outside investors or the corporation’s management.
• A limited liability company (LLC) offers the liability protection of a corporation but may be taxed as a partnership or corporation.
• Limited partners have liability limited to their investment and help finance the business but do not participate in operations.
• A limited partnership includes general partners with unlimited liability and limited partners with liability limited to their investment.
• A merger combines two or more firms to create a new company.
• A partnership involves two or more individuals agreeing to operate a business together for profit.
• An S corporation combines corporate structure with partnership taxation, allowing income and losses to flow through to stockholders and be taxed as personal income.
• A seller cooperative is where individual producers join together to compete more effectively with larger producers.
• A sole proprietorship is owned, operated, and often financed by one person.
• Stockholders (or shareholders) are the owners of a corporation who hold shares of stock with certain rights.
• A vertical merger combines companies at different stages in the same industry to gain control over resources or access different markets.

A quiz covering core economic principles, including market barriers, economic systems, monetary policy, inflation, unemployment, and the roles of entrepreneurs and the Federal Reserve. It tests understanding of resource allocation, market equilibrium, and economic indicators.