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B Survey Unit 1
First Exam Terms
Term | Definition |
---|---|
Value | The relationship between the price of a good or a service and the benefits that it offers customers |
Business | Any organization or activity that provides goods and services in an effort to earn profit |
Profit | The money that a business earns in sales (revenue) minus expenses |
Loss | When a business incurs expenses that are greater than its revenue |
Entrepreneurs | People who risk their time, money and other resources to start a business |
Standard of Living | The quality and quantity of goods and services available to a population |
Quality of Life | Overall sense of well-being experienced by an individual or group |
Nonprofits | Business like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain |
Factors of Production | The four fundamental elements that a business needs to achieve their objectives |
Natural Resources | Inputs that offer value in their natural state |
Capital | Synthetic resources that a business needs to produce goods and services |
Human Resources | Physical, intellectual and creative contributions of everyone who works within an economy |
Entrepreneurship | Process of creating opportunities by harnessing other factors of production |
Factors of Production | The four fundamental elements that a business needs to achieve their objectives |
Natural Resources | Inputs that offer value in their natural state |
Capital | Synthetic resources that a business needs to produce goods and services |
Human Resources | Physical, intellectual and creative contributions of everyone who works within an economy |
Competitive Environment | Companies can compete with one another |
Entrepreneurship | Process of creating opportunities by harnessing other factors of production |
Speed-to-Market | Rate at which a new product moves from conception to commercialization |
Economic Environment | External factors influence the buying habits of customers and businesses |
Workforce Advantage | Finding and holding the best talent to add to competitiveness |
Competitive Environment | Companies can compete with one another |
Technological Environment | Impact of technology on businesses |
Speed-to-Market | Rate at which a new product moves from conception to commercialization |
Business Technology | Any tools used to make a business more efficient |
Workforce Advantage | Finding and holding the best talent to add to competitiveness |
Technological Environment | Impact of technology on businesses |
Social Environment | An embodiment of values, beliefs and customs shared by a group of people |
Business Technology | Any tools used to make a business more efficient |
E-Commerce | Business transactions conducted online |
Social Environment | An embodiment of values, beliefs and customs shared by a group of people |
Demographics | Measurable characteristics of a population |
General Agreement Tariffs and Trade | International trade agreement to lower tariffs and promote free trade world wide |
Global Environment | The relationships and transactions between organizations worldwide |
Free Trade | International economic and political movement designed to help goods and services flow more freely |
Economics | The study of choices that people, companies and governments make in allocating resources |
General Agreement Tariffs and Trade | International trade agreement to lower tariffs and promote free trade world wide |
Macroeconomics | The study of a country's overall economic dynamics |
Economy | A financial and social system of how resources flow through society |
Microeconomics | The study of smaller economic units |
Economics | The study of choices that people, companies and governments make in allocating resources |
Economic System | A structure for allocating limited resources |
Macroeconomics | The study of a country's overall economic dynamics |
Capitalism | An economic system based on private ownership, economic freedom and fair competition |
Microeconomics | The study of smaller economic units |
Fundamentals of Capitalism | Right to own business and keep after tax profits, right to private property, right to free choice, and right to fair competition |
Economic System | A structure for allocating limited resources |
Socialism | Economic system based on the principle that the government should own and operate key enterprises |
Capitalism | An economic system based on private ownership, economic freedom and fair competition |
Communism | Economic and political system that calls for public ownership of all enterprises |
Fundamentals of Capitalism | Right to own business and keep after tax profits, right to private property, right to free choice, and right to fair competition |
Mixed Economies | Economies that embody elements of both planned and market systems |
Socialism | Economic system based on the principle that the government should own and operate key enterprises |
Privatization | Process of converting government-owned businesses to private ownership |
Communism | Economic and political system that calls for public ownership of all enterprises |
Pure Competition | Market structure with many competitors selling identical products, low barrier entry |
Mixed Economies | Economies that embody elements of both planned and market systems |
Monopolistic Competition | Many competitors selling differentiated products, low barrier entry |
Privatization | Process of converting government-owned businesses to private ownership |
Oligopoly | Handful of competitors selling products that can be similar or different, high barrier entry |
Pure Competition | Market structure with many competitors selling identical products, low barrier entry |
Monopoly | One producer completely dominating the industry leaving no room for competitors, almost impossible entry |
Natural Monopoly | Market structure with one company as the supplier of the product because the nature of the product makes a single supplier more efficient than multiple |
Demand | Quantity of products consumers are willing to buy at different market prices |
Demand Curve | Graphed relationship between price and quantity from a consumer standpoint |
Supply | Quantity of products suppliers are willing to sell at different market prices |
Supply Curve | Graphed relationship between price and quantity from a supplier standpoint |
Monopolistic Competition | Many competitors selling differentiated products, low barrier entry |
Oligopoly | Handful of competitors selling products that can be similar or different, high barrier entry |
Monopoly | One producer completely dominating the industry leaving no room for competitors, almost impossible entry |
Natural Monopoly | Market structure with one company as the supplier of the product because the nature of the product makes a single supplier more efficient than multiple |
Demand | Quantity of products consumers are willing to buy at different market prices |
Demand Curve | Graphed relationship between price and quantity from a consumer standpoint |
Supply | Quantity of products suppliers are willing to sell at different market prices |
Supply Curve | Graphed relationship between price and quantity from a supplier standpoint |
Gross Domestic Product | Total value of all goods or services produced within a nation over a given period of time |
Unemployment Rate | Percentage of people in the labor force over age 16 which do not have jobs and are actively seeking employment |
Frictional Unemployment | Short time spent searching for a better job |
Structural Unemployment | Long term as skills are no longer relevant or not enough jobs available |
Cyclical Unemployment | Deviation of unemployment from its natural rate due to business cycles |
Business Cycle | Periodic contraction and expansion that occur over the lifetime of an economy |
Contraction | Period of economic downturn |
Recession | Downturn marked by decrease in GDP for two consecutive quarters |
Depression | Especially deep and long-lasting recession |
Recovery | Period of rising economic growth and employment |
Expansion | Period of robust economic growth and high employment |
Inflation | Period of rising average prices |
Hyperinflation | Average monthly inflation rate of more than 50 percent |
Disinflation | Period of slowing average price increases |
Deflation | Period of falling average prices |
Consumer Price Index | Measures inflation through evaluating the change in weighted-average price of goods and services that the average consumer buys in a month |
Producer Price Index | Measures inflation through evaluating the change in prices that business pay each month for goods and services |
Productivity | Basic relationship between the production of goods and services and the resources needed to produce them Input / Output = Productivity |
Fiscal Policy | Government efforts to influence the economy through taxation and spending |
Debt Ceiling | Maximum amount Congress lets the government borrow |
Fiscal Cliff | Across-the-board spending cuts and tax hikes to decrease U.S. budget deficit |
Budget Surplus | Overage that occurs when revenue is higher than expenses over a given period of time |
Budget Deficit | Shortfall that occurs when expenses is higher than revenue over a period of time |
Federal Debt | Sum of all the money that the federal government has borrowed over the years and not yet repaid |
Money | Anything generally accepted as a medium of exchange |
Money Supply | The total amount of money in the economy |
M1 Money Supply | Currency, checking accounts, traveler's checks |
M2 Money Supply | M1, savings accounts, market accounts, certificates of deposit |
Federal Reserve | Central Bank of America that helps regulate the economy |
Commercial Banks | Privately owned financial institutions that accept demand deposits and make loans and provide other services |
FDIC | Federal agency that insures deposits in banks of up to 250,000 |
Monetary Policy | Federal reserve decisions that shape the economy by influencing interest rates and the supply of money |
Open Market Operations | Federal function of buying and selling government securities |
Discount Rate | Rate at which the Fed charges when it loans funds to banks |
Reserve Requirement | Specifies the minimum amount of reserves a bank must hold as a percentage of their bank deposits |
Opportunity Cost | Opportunity of giving up the second best choice when making a decision |
Absolute Advantage | Benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources |
Comparative Advantage | Benefit a country has in an industry if it can make products at a lower opportunity cost than other countries |
Balance of Trade | Basic measure of the difference in value between a nation's exports and imports |
Trade Surplus | Exports is higher than imports |
Trade Deficit | Imports are higher than exports |
Balance of Payments | Measure of the total flow of money into or out of a country |
Payments Surplus | More money flows in than out |
Payments Deficit | More money flows out than in |
Exchange Rate | Measurement of the value of one nations currency relative to the currency of other nations |
Countertrade | International trade that involves the barter of products for products rather than money |
Foreign Outsourcing | Contracting with foreign suppliers to produce products |
Importing | Buying products domestically that have been produced or grown in foreign nations |
Exporting | Selling products to foreign nations that have been produced domestically |
Foreign Direct Investment | Acquiring foreign firms or developing new facilities in foreign countries |
Partnership | Voluntary agreement in which two or more people act as co-owners of a business for profit |
Sociocultural Differences | Differences among cultures in language, attitudes and values |
Economic Differences | How the economy differences between markets |
Infrastructure | A country's physical facilities that support economic activity (Transportation, Communication, Energy, and Finance) |
Political and Legal Differences | Differences in legal standards and laws which affect the political climate |
International Trade Restrictions | Policies that restrict international trade, often to protect domestic businesses |
Tariffs | Taxes levied against imports |
Quotas | Limitations on the amount of specific products from certain countries that may be imported during a given period of time |
Voluntary Export Restraints | Limitations on the specific products that one nation will export to another |
Embargo | Complete ban on trade of a certain item or total halt in trade with another nation |
World Trade Organization (WTO) | Global institution to promote international trade and settle trade disputes |
World Bank | International cooperative of 189 member countries working to reduce poverty in the developing world |
Trading Block | Group of countries that have reduced or even eliminated tariffs allowing for free flow of goods among member nations |
Common Market | Group of countries that have eliminated tariffs and harmonized trading rules to free flow of goods among member nations |
USMCA | Treaty among US, Mexico and Canada that eliminated trade barriers and investment restrictions |
European Union | World's largest free market that consists of 27 European nations |
Financial Markets | Markets that transfer funds from savers to borrowers |
Depository Institutions | Financial intermediary that obtains funds by accepting checking and saving deposits and lending those funds to borrowers |
Credit Union | Organized as a cooperative and owned by depositors |
Savings and Loan Association | Obtained most of its funds through saving deposits primarily used for mortgage loans |
Securities Broker | Acts as an agent for investors and earn commission fees for their services |
Securities Dealer | Participates directly in security markets selling and buying stocks for its own account |
Investment Bank | Specializes in helping firms raise financial capital by issuing securities in primary markets |
Federal Reserve Act | Established the Federal Reserve |
Banking Act | Established the FDIC and prohibited commercial banks from selling insurance or acting as investment banks |
Securities Act | First major law regulating securities industry, requiring firms to issue stock in a public offering through the SEC |
Securities Exchange Act | Established SEC to oversee and regulate the securities industry |
SEC | Federal agency with primary responsibility for regulating the securities industry |
Financial Services Modernization Act | Overturned the Banking Act |
Common Stock | Basic form of ownership in a corporation |
Capital Gain | Return on an asset that results when its market price rises above the price paid for it |
Preferred Stock | Gives its holder preference over common stock in terms of dividends and claim to assets |
Bond | Debt instrument issued by a corporation or government entity |
Maturity Date | Date of when a bond will become true |
Par Value | Value of a bond at maturity |
Coupon Rate | Interest paid on a bond, expressed as a percentage of the bond's current market price |
Current Yield | Amount of interest earned on a bond |
Convertible Security | A bond or share that can be exchanged for a stated number of shares of common stock |
Financial Diversification | Strategy of investing in a wide array of securities to reduce risk |
Mutual Fund | An institutional investor that raises funds by selling shares to investors and uses the funds to buy a portfolio of securities |
Exchange-Traded Fund | Shares traded on security markets that represent the legal ownership over part of a basket of individual stock certificates or other securities |
Public-Offering | Issue of new securities to investors |
IPO | First time that a company issues stocks to the general public |
Underwriting | Arrangement in which an investment banker agrees to purchase all shares or a public offering at an agreed upon price |
Registration Statement | Document that firms must file with the SEC when they sell securities through a public offering |
Private Placement | Primary market issue that is negotiated between the corporation and a small group of investors |
Accredited Investor | Organization or investor who meets criteria established by SEC |
Stock Exchange | Organized venue for trading stocks |
OTC Market | Market where securities not on the stock exchange are traded |
Electronic Communication Network | Computerized trading system that matches buyers and sellers |
Stock Index | Tracks how the price of specific stocks has changed |
Dow Jones Industrial Average | Tracks stock prices of 30 well known U.S. corporations |
S&P 500 | Stock index based on 500 major U.S. corporations in a variety of industries and markets |