Chapter 1 The Foundations of Business KEY TERMS AND DEFINITIONS Resources Inputs used to produce outputs. Accountant Financial advisor responsible for measuring, summarizing, and communicating financial and managerial information. Business Activity that provides goods or services to consumers for the purpose of making a profit. Business Cycle Pattern of expansion and contraction in an economy. Capitalism Economic system featuring the lowest level of government control over allocation and distribution. Communism Economic system featuring the highest level of government control over allocation and distribution. Consumer Confidence Index Measure of optimism that consumers express about the economy as they go about their everyday lives. Consumer Price Index (CPI) Index that measures inflation by measuring the prices of goods purchased by a typical consumer. Deflation Decrease in overall price level. Demand Quantity of a product that buyers are willing to purchase at various prices. Demand Curve Graph showing the quantity of a product that will be bought at certain prices. Depression Severe, long-lasting recession. Economic Indicator Statistic that provides information about trends in the economy. Economic System Means by which a society makes decisions about allocating resources to produce and distribute products. Economics Study of how scarce resources are used to produce outputs—goods and services—that are distributed among people. Equilibrium Price Price at which buyers are willing to buy exactly the amount that sellers are willing to sell. Factors Of Production Resources consisting of land, labor, capital (money, buildings, equipment), and entrepreneurial skills combined to produce goods and services. Finance Activities involved in planning for, obtaining, and managing a company’s funds. Fiscal Policy
Governmental use of taxation and spending to influence economic conditions. Free Market System Economic system in which most businesses are owned and operated by individuals. Full Employment Condition under which about 95 percent of those who want to work are employed. Gross Domestic Product (GDP) Measure of the market value of all goods and services produced by a nation’s economy in a given year. Inflation Rise in the overall price level. Lagging Economic Indicator Statistical data that measure economic trends after the overall economy has changed. Leading Economic Indicator Statistical data that predict the status of the economy three to twelve months in the future. Legal Monopoly Monopoly in which one seller supplies a product or technology to which it holds a patent. Management Process of planning for, organizing, directing, and controlling a company’s resources so that it can achieve its goals.
- Spring '08
- Economics, Business, Economic system