Chapter 2 - population growth, and price indexes) ii....

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Chapter 2: Understanding How Economics Affects Business 1. Explain basic economics. 2. Explain what capitalism is and how free markets work 3. Compare socialism and communism 4. Analyze the trend toward mixed economies 5. Describe the economic system of the United States, including the significance of key economic indicator (especially GDP), productivity and the business cycle 6. Contrast fiscal policy and monetary policy and explain how each affects the economy. I. Explain basic Economics a. 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. b. Two major branches of economics i. Macroeconomics- the part of economics study that looks at the operation of a nation’s economy as a whole. (gross domestic product (GDP), unemployment rate,
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Unformatted text preview: population growth, and price indexes) ii. Microeconomics- the part of economics study that loks at the behavior of people and organizations in particular markets. (pricing and supply/demand interactions) c. Resource Development- the study of how to increase resources and to create the conditions that will make better use of those resources. d. The secret to economic development is contained in the last statement. e. Adam Smith(the father of modern economics) f. Invisible hand- a phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all. i. Individual hand is when business owners strive to improve their own self-worth and in doing so this stimulates the economy. II. Explain what capitalism is and how free markets work...
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Chapter 2 - population growth, and price indexes) ii....

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