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BUSA EXAM 1 QUESTIONS AND ANSWERS
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BUSA EXAM 1 QUESTIONS AND ANSWERS
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BUSA EXAM 1 QUESTIONS AND ANSWERSDefinition of a business - Answers-Any organization or activity that provides goods and
services in an effort to earn a profit
Value - Answers-relationship between the price of a good or a service and the benefits
that it offers its customers
Profit - Answers-The money that a business earns in sales (or revenue), minus
expenses, such as the cost of goods and the cost of salaries. Revenue - Expenses =
Profit (or Loss)
Loss - Answers-When a business incurs expenses that are greater than its revenue
Macroeconomics - Answers-study of a country's overall economic dynamics, such as
the employment rate, the gross domestic product, and taxation policies
Natural monopolies - Answers-A market structure with one company as the supplier of a
product because the nature of that product makes a single supplier more efficient than
multiple, competing ones
Monopoly - Answers-A market structure with one producer completely dominating the
industry, leaving no room for any significant competitors. Barriers to entry tend to be
virtually insurmountable
Oligopolies - Answers-A market structure with only a handful of competitors selling
products that can be similar or different; barriers to entry are typically high
monopolistic competition - Answers-A market structure with many competitors selling
differentiated products. Barriers to entry are low
pure competition - Answers-A market structure with many competitors selling virtually
identical products. Barriers to entry are quite low
Supply - Answers-The quantity of products that producers are willing to offer for sale at
different market prices
Demand - Answers-quantity of products that consumers are willing to buy at different
market prices
Economic expansion - Answers-period of robust economic growth and high employment
Economic contraction - Answers-period of economic downturn, marked by rising
unemployment and falling business production
Economic depression - Answers-especially deep and long-lasting recession
, Factors of production - Answers-Four fundamental elements—natural resources,
capital, human resources, and entrepreneurship—that businesses need to achieve their
objective
Socialism - Answers-An economic system based on the principle that the government
should own and operate key enterprises that directly affect public welfare
Capitalism - Answers-economic system— also known as the private enterprise or free
market system—based on private ownership, eco- nomic freedom, and fair competition
Microeconomics - Answers-The study of smaller economic units such as individual
consumers, families, and individual businesses
Economic recovery - Answers-A period of rising economic growth and employment.
Fiscal policy - Answers-Government efforts to influence the economy through taxation
and spending.
monetary policy - Answers-Federal Reserve decisions that shape the economy by
influencing interest rates and the supply of money
Hyperinflation - Answers-An average monthly inflation rate of more than 50%
Functions of the US Federal Reserve Bank - Answers-conduct the nation's monetary
policy, provide and maintain an effective and efficient payments system, and. supervises
and regulate banking operations.
Business cycle - Answers-the periodic contraction and expansion that occur over time in
virtually every economy
Balance of payments - Answers-measure of the total flow of money into or out of a
country
balance of trade: basic measure of the difference in value between a nation's exports
and imports, including both goods and services - Answers-
trade surplus - Answers-Overage that occurs when the total value of a nation's exports
is higher than the total value of its imports
trade deficit - Answers-Shortfall that occurs when the total value of a nation's imports is
higher than the total value of its exports
Countertrade - Answers-International trade that in- volves the barter of products for
products rather than for currency
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