...Q: Define economic system. What is the relation between culture and economics? A: An economic system consists of the structure and processes that a country uses to allocate its resources and conduct its commercial activities. A nation’s economy tends to express individual or group values as reflected in its history and culture. However, no economy is focused entirely on the group at the expense of individuals or vice versa. 2. Q: What is a centrally planned economy? Describe the link between central planning and communism. A: A centrally planned economy is one in which a nation’s government owns most of the land, factories, and other economic resources and plans nearly all economic activity. Karl Marx popularized the idea of central economic planning in the nineteenth century while promoting his belief in communism. Marx argued that market economies cannot be reformed—governments must be overthrown and economies replaced with more equitable “communist” systems. 3. Q: Identify several factors that contributed to the decline of centrally planned economies. A: Factors included: (1) failure to create economic value, (2) failure to provide incentives, (3) failure to achieve rapid growth, and (4) failure to satisfy customer needs. 4. Q: Describe China’s experience with central planning, and the challenges it faces. A: China always reserved a place for private initiative even in the early days of its implementation of communism in 1949. Families in rural areas owned their...
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...Chapter 1 Introduction to Business & Economics Lecture Notes A. LEARNING OBJECTIVES After studying this chapter, students should be able to: 1. Discuss what you must do to be successful in the world of business. 2. Define business and identify potential risks and rewards. 3. Define economics and describe the two types of economic systems: capitalism and command economy. 4. Identify the ways to measure economic performance. 5. Examine the four different phases in the typical business cycle. 6. Outline the four types of competition. B. BRIEF CHAPTER OUTLINE I. Business: A Definition A. The Organized Effort of Individuals B. Satisfying Needs C. Business Profit II. Types of Economic Systems A. Capitalism B. Capitalism in the United States 1. Households 2. Businesses 3. Governments C. Command Economies 1. Socialism 2. Communism III. Measuring Economic Performance A. The Importance of Productivity in the Global Marketplace B. Important Economic Indicators that Measure a Nation’s Economy IV. The Business Cycle V. Types of Competition A. Perfect Competition 1. The Basics of Supply and Demand 2. The Equilibrium, or Market, Price B. Monopolistic Competition C. Oligopoly D. Monopoly C. COMPREHENSIVE LECTURE OUTLINE I. BUSINESS: A DEFINITION Business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy...
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...A. Terms of Trade The relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods. An improvement of a nation's terms of trade benefits that country in the sense that it can buy more imports for any given level of exports. A deteriorating TOT would mean import prices rise relative to export prices. Lower results generally indicate that there is more money going out of the economy than coming in thus resulting to lower GDP figures. B. Demographic Transition Model Birth and death rates are both low, leading to a total population which is high and stable. Death rates are low for a number of reasons, primarily lower rates of diseases and higher production of food. The birth rate is low because people have more opportunities to choose if they want children; this is made possible by improvements in contraception or women gaining more independence and work opportunities. C. Trade Account The trade balance/ trade account is the amount a country receives for the export of goods and services minus the amount it pays for its imports of goods and services. Current Account The difference between a nation’s savings and its investment. The current account is an important indicator about an economy's health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current...
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...and the Economy 1. Explain how an increased federal budget deficit resulting from a recession can actually help stabilize an economy. 2. Describe how adjustments in wages and prices take the economy from the short-run equilibrium to the long-run equilibrium. 3. Explain why a system of marketable pollution permits leads to less costly pollution abatement and a higher concentration of polluted areas than a command-and-control system. 4. Although GDP per capita is the most commonly used measure of a country’s success, many economists believes it does not give an accurate measure of a nation’s economic well-being. Some studies have concluded that that GDP is not the best measure of well-being, and although it may be the best available on a timely basis, other factors need to be considered in addition to GDP to give a more accurate picture of economic well-being and the disparity of well-being between nations. Clearly identify at least three such factors that in your view should be included in the GDP calculations. Explain and illustrate how they will help to improve the GDP as a tool for measuring the well-being of a nation. Describe the impact of public goods and externalities on the functioning of an economy. • Use the dynamics of the labor market to anticipate wage rate and labor supply changes. • Analysis of the key macroeconomic phenomena: GDP, unemployment, inflation. • Use technology and information resources to research issues in economics Solution: 1) Explain how an increased...
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...Chapter 2: Economics: The Framework for Business TRUE/FALSE 1. An economy is both a social and a financial system. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 2. Financial or social systems are not essential to the development of a strong economy. ANS: F DIF: LL1 REF: Page 15 OBJ: 1 3. The study of economics focuses on how people, businesses, and governments choose to allocate resources. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 4. A key economic goal is to provide a deep understanding of past choices that can be used to guide future business decisions. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 5. Economists forecast business needs based on a deep understanding of past choices. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 6. Microeconomics is the study of broad, economy-wide issues such as the unemployment rate, gross domestic product, and inflation. ANS: F DIF: LL2 REF: Page 15 OBJ: 1 7. Macroeconomic conditions impact day-to-day life by influencing variables such as the availability of jobs, the amount of take-home pay households have available after paying taxes, and the buying power of those incomes. ANS: T DIF: LL2 REF: Page 15 OBJ: 1 8. Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke’s class is concerned with microeconomic issues. ANS: T DIF: LL2 REF: Page 15 OBJ: 1 9.. Capitalism is based on private ownership, economic freedom, and fair competition. ANS: T DIF: LL2 REF:...
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...Chapter 2: Economics: The Framework for Business TRUE/FALSE 1. An economy is both a social and a financial system. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 2. Financial or social systems are not essential to the development of a strong economy. ANS: F DIF: LL1 REF: Page 15 OBJ: 1 3. The study of economics focuses on how people, businesses, and governments choose to allocate resources. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 4. A key economic goal is to provide a deep understanding of past choices that can be used to guide future business decisions. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 5. Economists forecast business needs based on a deep understanding of past choices. ANS: T DIF: LL1 REF: Page 15 OBJ: 1 6. Microeconomics is the study of broad, economy-wide issues such as the unemployment rate, gross domestic product, and inflation. ANS: F DIF: LL2 REF: Page 15 OBJ: 1 7. Macroeconomic conditions impact day-to-day life by influencing variables such as the availability of jobs, the amount of take-home pay households have available after paying taxes, and the buying power of those incomes. ANS: T DIF: LL2 REF: Page 15 OBJ: 1 8. Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke’s class is concerned with microeconomic issues. ANS: T DIF: LL2 REF: Page 15 OBJ: 1 9.. Capitalism is based on private ownership, economic freedom, and fair competition. ANS: T DIF: LL2 REF:...
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... Real GDP is the GDP adjusted for price changes caused by inflation or deflation. Because of inflation, GDP increases do not accurately reflect the true growth in a countries economy, Real GDP represents the GDP with the inflation rate taken into account. 3. Nominal GDP Nominal GDP is the market value of all final goods and services produced by a country, based on goods and services produced by a country, at their respective prices, unaccounted for inflation. 4. Unemployment Rate The unemployment rate is a measure of a countries unemployment and is calculated as a percentage by dividing the number of unemployed workers by all workers currently in the labor force. It is important to remember that people outside of the labor force are not included. When an economy reaches recession, usually the unemployment rate rises along with it. 5. Inflation Rate The Inflation rate is the rate that prices of goods and services increase and buying power decreases. The inflation rate represents the annualized percentage change on general prices. 6. Fiscal Policy Fiscal policy is a country’s plan administered by it’s government, to adjust spending levels and tax rates to influence it’s economy. The goal is to help the country’s economy to grow and avoid poverty. 7. Monetary Policy Monetary policy is a central bank plan...
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...Explain how an increased federal budget deficit resulting from a recession can actually help stabilize an economy. Budget deficits and surpluses can help to stabilize the economy. If the economy enters a recession taxes will fall as income and employment fall. At the same time, government spending will increase as people are given unemployment compensation and other transfers such as welfare payments. Such automatic changes in revenue and expenditures work to increase the deficit. At the same time, they also work to mitigate the decrease in disposable income that households are experiencing. This maintains consumption at a higher level than would otherwise be the case. If the economy is in an expansion and experiencing inflation, a budget surplus works to stabilize the economy. In this instance taxes increase in response to the increase in employment and income. At the same time, government expenditures fall as fewer individuals receive unemployment compensation and other transfer payments. These changes work to lower the level of consumption and hence the level of aggregate demand. Thus, the surplus works to stabilize the economy during inflationary periods. Describe how adjustments in wages and prices take the economy from the short-run equilibrium to the long-run equilibrium. If the economy is in an expansion and experiencing inflation, a budget surplus works to stabilize the economy. Over time adjust and the economy reaches its long-run equilibrium. The long run puts...
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...The Business Environment GUILLAUME, ORIS Queena Swanson BUS 100 2/4/2013 The public sector and private sector are terms used to describe the two main types of business industries within an economy. The largest distinction between them is that the public sector is owned and operated by the government, while the private sector is dominated by private business owners. The easiest way to tell the different between the two organizations is to look at who is in charge. In a public sector, employees, supervisors, and managers all work for the government. The company or organization is not owned by a corporation or a private owner, but the government of the region. Private sector organizations are operated by private citizens and many answer to a board of directors, owning partnership, or single owner. Employees in private sectors jobs are employed by the organization. The organizations are also divided by their aims. Public sector groups have a duty to serve the public, and not usually in direct competition with other groups to meet the same demand. They are not profit oriented, and tend to provide services rather than goods. Private companies, usually aim for profit and try to outperform competitive business to meet the same demands. While private companies may have some humanitarian goals, their bottom line is typically the profitability of the business, not necessarily serving the public. There are many private businesses that may be considered part of the private...
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...I Trimester 2 1. Explain how a firm’s production function is related to its marginal product of labor, how a firm’s marginal product of labor is related to the value of its marginal product? 2. What are the main causes of discrimination in income, explain on context of Indian economy? 3. How does the extent of income inequality in India compare to that of other nations around world? What the pros and cons are of in kind transfers to the poor? 4. What do you mean a consumer’s indifference curves; draw a curves for wine and cheese. Describe and explain four properties of these indifference curves? 5. What do you mean by political economy? How political economy different from behavioral economic? 6. Explain why an economy’s income must equal its expenditures? (fiscal policy) 7. Why do economists use real GDP rather than nominal GDP to gauge (test) economic well- being? 8. Why is it desirable for a country to have a large GDP? Give example of something that would raise GDP and yet be undesirable. 9. What do you think has a greater effect on the consumer price index: a 10 percent increase in the price of wheat or a 10 percent increase in the price of rice? Why? 10. Describe the three problems that make the consumer price index an imperfect measure of the cost of living? 11. Explain the meaning of nominal interest rate and real interest rate. How are they related? 12. What does the level of a nation’s GDP measure? What does the growth...
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...P5: Describe the influence of two contrasting economic environments on business activities within a selected organisation. M2: Compare the challenges to selected business activities within a selected organisation, in two different economic environments. This assignment is asking me to describe the influence of two contrasting economic environments on business activities within a selected organisation. Nike is a global brand specialising in the design and manufacture of athletic apparel, footwear, accessories and equipment; it is headquartered in the United States, Europe, and the Asia Pacific Region. Its products are available through over 20,000 retail outlets, including those in its own footfall outlets, e.g. Nike Factory stores. This study considers the contemporary business environment of Nike using a PESTLE approach, paying particular attention to any human resources management (HRM) issues that may arise under each heading. Overall, it is argued here that Nike has attempted to address various business and social challenges by harmonising its value proposition to ‘Consumers, shareholders, business partners, employees, and the community.’ There are many external environmental factors that can affect your business. It is common for managers to assess each of these factors closely. The aim is always to take better decisions for the firm’s progress. Some common factors are political, economic, social and technological...
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...Emerging Merging Economies and the Sudden Income Inflows or Outflows Name Tutor Institution Course Date Emerging Merging Economies and the Sudden Income Inflows or Outflows The concept of emerging economies is often used to provide a description of the aspects of a particular country’s economy developing towards a more advanced state (Giudice, Peruta, & Carayannis, 2014). It is often by the means of a rapid growth and the process of industrialization in the country. Nonetheless, these nations are often experiencing an expansion role in both the world’s economy and the political frontier. According to various authors, the concept of cash inflows refers to the money that an organization receives as a result of the operating activities, the financial activities, and the investment activities (Hoque, 2005). On the other hand, cash outflows refer to the total outgoing funds from a company in a particular period. It also includes expenses such as salaries, maintenance, supplies, servicing debts, and the payments of dividends. Regarding the aspects of the topic, there is a need to create an analysis of the interpretations of the markets with regards to the inflow and outflow of income. The developments of a capital market in a nation will offer a significant influence on the amount of money that is received in the market as compared to the expenses that the relevant institutions are to incur. It is, however, important to write about this topic since it offers an interpretation...
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... | | |how well a nation’s |Goss Domestic Product - GDP | | |economy is doing. This is| | | |the value of money after | | | |the goods and services | | | |are calculated during a | | | |certain time. | | |Real GDP |Real GDP is the whole |http://www.diffen.com/difference/Nominal_GDP_vs_Real_GDP | | |economical way to | | | |determine the value of |Nominal GDP vs. Real GDP | | |the economy after it has |...
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...used in the terms of wealth. It is a word used to describe how much a person has or their financial worth. Money was invented to replace the barter system. The barter system is described as two people trading goods or services that will benefit the other. This system was useful for many centuries but people began to find it hard to benefit from this system over time. Money was then invented and it allowed people to trade money for goods and services. Legal tender convenient, easy to carry, easy to save and it could be passed on to many people for many different reasons. Today money is used in almost every aspect of the world and its economy. The Central Bank is an institution that oversees and regulates the banking system and controls the monetary base. It has exclusive privileges to lend its government money. The Central Bank controls the interest rates in the lending market and it borrowers. The Central bank is different from a Commercial Bank because it has the monopoly of creating money for its nation’s currency. The money is then lent to the government for legal tender. The main function is to control the nation’s money supply and they are considered to be the last resort to lend money to other Commercial Banks in the time of a crisis. The Central Bank is also in place to make sure Commercial Banks don’t have any fraudulent activity. The direction of the recent monetary policies in the United States is for the economy to grow strong and to pull away from some of the temporary...
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...macroeconomics. Explain the factors that drive demand and supply. 2 Describe each of the four different types of market structures in a private enterprise system, and compare the three major types of economic systems. 3 3 Identify and describe the four stages of the business cycle. Explain how productivity, price level changes, and employment levels affect the stability of a nation’s economy. 4 Discuss how monetary policy and fiscal policy are used to manage an economy’s performance. 5 Describe the major global economic challenges of the 21st century. Economic Challenges Facing Contemporary Business Rudyanto Wijaya/iStockphoto Copyright ©2012 John Wiley & Sons, Inc. NASCAR Tries to Restart Its Engine ASCAR is widely known as the most popular spectator sport in the United States. Yet even its most diehard fans are tapping the brakes when it comes to buying tickets to their favorite speedway. Tracks in cities such as Phoenix and Talladega have reported double-digit percent declines in attendance. Just as worrisome is the fact that, instead of watching races at home, fans are changing the channel. Some critics of NASCAR blame a drop in dramatic action and a mandated car chassis design that leaves car models undifferentiated. Others say that the races are just too long and the broadcast commentary is boring. But NASCAR defenders argue that there’s another huge obstacle: the economy. “We knew admissions would be down [this year],” admits Roger VanDerSnick...
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