Aggregate Output

the total quantity of goods and services produced by an economic system during a given period

Balance of Trade

the economic value of all the products that a country exports minus the economic value of the products it imports

Business

organization that provides good or services to earn profits

Business Cycle

short-term pattern of economic expansions and contractions

Capital

funds needed to create and operate a business enterprise

Capitalism

system that sanctions the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive

Communism

political system in which the government owns and operates all factors of production

Competition

vying among businesses for the same resources or customers

Consumer Price Index (CPI)

a measure of the prices of typical products purchased by consumers living in urban areas

Demand

the willingness and ability of buyers to purchase a good or service

Demand and Supply Schedule

assessment of the relationships among different levels of demand and supply at different price levels

Demand Curve

graph showing how many units of a product will be demanded (bought) at different prices

Depression

a prolonged and deep recession

Domestic Business Environment

the environment in which a firm conducts its operations and derives its revenues

Economic Environment

relevant conditions that exist in the economic system in which a company operates

Economic Indicators

a statistic that helps assess the performance of an economy

Economic System

a nation's system for allocating its resources among its citizens

Entrepreneur

individual who accepts the risks and opportunities involved in creating and operating a new business venture

External Environment

everything outside an organization's boundaries that might affect it

Factors of Production

resources used in the production of goods and services labor, capital, entrepreneurs, physical resources, and information resources

Fiscal Policies

policies used by a government regarding how it collects and spends revenue

Global Business Environment

the international forces that affect a business

GDP Per Capita

gross domestic product divided by total population

Gross Domestic Product (GDP)

total value of all goods and services produced within a given period by a national economy through domestic factors of production

Gross National Product (GNP)

total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Inflation

occurs when widespread price increases occur throughout an economic system

Information Resources

data and other information used by businesses

Labor (Human Resources)

physical and mental capabilities of people as they contribute to economic production

Law of Demand

principle that buyers will purchase (demand) more of a product as its price drops and less as its price increases

Law of Supply

principle that producers will offer (supply) more of a product for sale as its price rises and less as its price drops

Market

mechanism for exchange between buyers and sellers of a particular good or service

Market Economy

economy in which individuals control production and allocation decisions through supply and demand

Market Price (Equilibrium Price)

profit-maximizing price at which the quantity of goods demanded and the quantity of good supplied are equal

Mixed Market Economy

economic system featuring characteristics of both planned and market economies

Monetary Policies

policies used by a government to control the size of its money supply

Monopolistic Competition

market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors

Monopoly

market or industry in which there is only one producer that can therefore set the prices of its products

National Debt

the amount of money the government owes its creditors

Natural Monopoly

industry in which one company can most efficiently supply all needed goods or services

Nominal GDP

GDP measured in current dollars or with all components valued at current prices

Oligopoly

market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products

Perfect Competition

market or industry characterized by numerous small firms producing an identical product

Physical Resources

tangible items that organizations use in the conduct of their businesses

Planned Economy

economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions

Political-Legal Environment

the relationship between business and government

Private Enterprise

economic system that allows individuals to pursue their own interests without undue governmental restriction

Privatization

process of converting government enterprises into privately owned companies

Productivity

a measure of economic growth that compares how much a system produces with the resources needed to produce it

Profits

difference between a business's revenues and its expenses

Purchasing Power Parity

the principle that exchange rates are set so that the prices of similar products in different countries are about the same

Real GDP

GDP adjusted to account for changes in currency values and price changes

Recession

a period during which aggregate output, as measured by GDP, declines

Shortage

situation in which quantity demanded exceeds quantity supplied

Socialism

planned economic system in which the government owns and operates only selected major sources of production

Sociocultural Environment

the customs, mores, values, and demographic characteristics of the society in which an organization functions

Stability

condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate

Stabilization Policy

government economic policy intended to smooth out fluctuations in output and unemployment and to stabilize prices

Standard of Living

the total quantity and quality of goods and services people can purchase with the currency used in their economic system

Supply

the willingness and ability of producers to offer a good or service for sale

Supply Curve

graph showing how many units of a product will be supplied (offered for sale) at different prices

Surplus

situation in which quantity supplied exceeds quantity demanded

Technological Environment

all the ways by which firms create value for their constituents

Unemployment

the level of joblessness among people actively seeking work in an economic system