Introduction to Business Midterm Study Guide
Any organization or activity that provides goods and services in an effort to earn
a profit.
Business
The money that a business earns in sales (revenues), minus expenses, such as
cost of goods, and cost of salaries.
Profit
Profit Equation
Revenue - Expenses = Profit (Net Income/Net Loss)
When a business incurs expenses that are greater than its revenue
Loss
People who risk their time, money, and other resources to start and manage a
business
Entrepreneurs
The quality and quantity of goods and services available to a population
Standard of Living
The overall sense of well-being experienced by either an individual or a group
Quality of Life
Four fundamental elements, factors of production, a businesses needs to achieve
their objective
Natural Resources
Capital
Human Resources
Entrepreneurship
External forces that affect business
Economy
Competition
Technology
Social Cultures
Demographics
Global Markets
A financial and social system or how resources flow through society, form
production, to distribution, to consumption
Economy
The study of the choices that people, companies, and governments make in
allocating society's resources
Economics
The study of a country's overall economic dynamics, such as the employment
rate, the gross domestic product, and taxation policies
Macroeconomics
The study of smaller economic units such as individual consumers, families, and
individual business
Microeconomics
Government efforts to influence the economy through taxation and spending
Fiscal Policy
, Budget Surplus
If revenue is higher than spending
Budget Deficit
If spending is higher than revenue
When there is a deficit the government must borrow money, the sum of all the
money borrowed and not yer repaid is called the ___________ ____________
Federal Debt
Federal Reserve decisions that shape the economy by influencing interest rates
and the supply of money
Monetary Policy
What is the purpose of the Federal Reserve?
manages U.S. monetary policy, bail outs, banking services for member banks and the
federal government
An economic system also known as the private enterprise or free market system,
based on private ownership, economic freedom and fair competition
Capitalism
An economic system based on the principle that the government should own and
operate key enterprises that directly affect public welfare
Socialism
An economic and political system that calls for public ownership of virtually all
enterprises, under the direction of a strong central government
Communism
The quantity of products that producers are willing to offer for sale at different
market prices
Supply
The quantity of products that consumers are willing to buy at different market
prices
Demand
The graphed relationship between price and quantity from a supplier standpoint
Supply Curve
The graphed relationship between price and quantity from a customer demand
standpoint
Demand Curve
How is price and quantity affected by both supply and demand?
Prices increase with more supply demand & prices decrease when demand is lower
The price associate with the point at which the quantity demanded of a product
equals the quantity supplied
Equilibrium Price
The percentage of people in the labor force over age 16 who not have jobs and
are actively seeking employment
Unemployment Rate
The periodic contraction and expansion that occur over time in virtually every
economy
Business Cycle
Steps in the Business Cycle
Peak, Contraction, Trough, Recovery, Expansion, Peak
Any organization or activity that provides goods and services in an effort to earn
a profit.
Business
The money that a business earns in sales (revenues), minus expenses, such as
cost of goods, and cost of salaries.
Profit
Profit Equation
Revenue - Expenses = Profit (Net Income/Net Loss)
When a business incurs expenses that are greater than its revenue
Loss
People who risk their time, money, and other resources to start and manage a
business
Entrepreneurs
The quality and quantity of goods and services available to a population
Standard of Living
The overall sense of well-being experienced by either an individual or a group
Quality of Life
Four fundamental elements, factors of production, a businesses needs to achieve
their objective
Natural Resources
Capital
Human Resources
Entrepreneurship
External forces that affect business
Economy
Competition
Technology
Social Cultures
Demographics
Global Markets
A financial and social system or how resources flow through society, form
production, to distribution, to consumption
Economy
The study of the choices that people, companies, and governments make in
allocating society's resources
Economics
The study of a country's overall economic dynamics, such as the employment
rate, the gross domestic product, and taxation policies
Macroeconomics
The study of smaller economic units such as individual consumers, families, and
individual business
Microeconomics
Government efforts to influence the economy through taxation and spending
Fiscal Policy
, Budget Surplus
If revenue is higher than spending
Budget Deficit
If spending is higher than revenue
When there is a deficit the government must borrow money, the sum of all the
money borrowed and not yer repaid is called the ___________ ____________
Federal Debt
Federal Reserve decisions that shape the economy by influencing interest rates
and the supply of money
Monetary Policy
What is the purpose of the Federal Reserve?
manages U.S. monetary policy, bail outs, banking services for member banks and the
federal government
An economic system also known as the private enterprise or free market system,
based on private ownership, economic freedom and fair competition
Capitalism
An economic system based on the principle that the government should own and
operate key enterprises that directly affect public welfare
Socialism
An economic and political system that calls for public ownership of virtually all
enterprises, under the direction of a strong central government
Communism
The quantity of products that producers are willing to offer for sale at different
market prices
Supply
The quantity of products that consumers are willing to buy at different market
prices
Demand
The graphed relationship between price and quantity from a supplier standpoint
Supply Curve
The graphed relationship between price and quantity from a customer demand
standpoint
Demand Curve
How is price and quantity affected by both supply and demand?
Prices increase with more supply demand & prices decrease when demand is lower
The price associate with the point at which the quantity demanded of a product
equals the quantity supplied
Equilibrium Price
The percentage of people in the labor force over age 16 who not have jobs and
are actively seeking employment
Unemployment Rate
The periodic contraction and expansion that occur over time in virtually every
economy
Business Cycle
Steps in the Business Cycle
Peak, Contraction, Trough, Recovery, Expansion, Peak
