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BUSA EXAM 1 -STUDY GUIDE-
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BUSA EXAM 1 -STUDY GUIDE-
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BUSA EXAM 1 -STUDY GUIDEFree enterprise - Answers-the system of business in which individuals are free to decide
what to produce, how to produce it, and at what price to sell it
Cultural or workplace diversity - Answers-differences among people in a workforce
owing to race, ethnicity, and gender
Business - Answers-the organized effort of individuals to produce and sell, for a profit,
the goods and services that satisfy society's needs
Profit - Answers-what remains after all business expenses have been deducted from
sales revenue
Economy - Answers-the way in which people deal with the creation and distribution of
wealth
Entrepreneur - Answers-a person who risks time, effort, and money to start and operate
a business
Capitalism - Answers-an economic system in which individuals own and operate the
majority of businesses that provide goods and services
Market economy - Answers-an economic system in which businesses and individuals
decide what to produce and buy, and the market determines quantities sold and prices
Consumer products - Answers-goods and services purchased by individuals for
personal consumption
Command economy - Answers-an economic system in which the government decides
what goods and services will be produced, for whom available goods and services will
be produced, and who owns and controls the major factors of production
Productivity - Answers-the average level of output per worker per hour
Gross domestic product - Answers-the total dollar value of all goods and services
produced by all people within the boundaries of a country during a specified time period-
usually a one-year period
Stakeholders - Answers-all the different people or groups of people who are affected by
an organization's policies, decisions, and activities
Economics - Answers-the study of how wealth is created and distributed
Microeconomics - Answers-the study of the decisions made by individuals and
businesses
, Macroeconomics - Answers-the study of the national economy and the global economy
Inflation - Answers-a general rise in the level of prices
Deflation - Answers-a general decrease in the level of prices
Consumer price index - Answers-a monthly index that measures the changes in prices
of a fixed basket of goods purchased by a typical consumer in an urban area
Producer price index - Answers-an index that measures prices that producers receive
for their finished goods
Business cycle - Answers-the recurrence of periods of growth and recession in a
nation's economic activity
Recession - Answers-two or more consecutive three-month periods of decline in a
country's GDP
Depression - Answers-a severe recession that lasts longer than a typical recession and
has a larger decline in business activity when compared to a recession
Federal deficit - Answers-a shortfall created when the federal government spends more
in a a fiscal year than it receives
National debt - Answers-the total of all federal deficits
Competition - Answers-rivalry among businesses for sales to potential customers
Supply - Answers-the quantity of a product that producers are willing to sell at each of
the various prices
Demand - Answers-the quantity of a product that buyers are willing to purchase at each
of the various prices
Barter - Answers-exchange (goods or services) for other goods or services without
using money
Adam Smith - Answers-Scottish economist who wrote the Wealth of Nations a precursor
to modern Capitalism.
Invisible Hand - Answers-a term created by Adam Smith to describe how an individual's
personal gain benefits others and a nation's economy
Laissez-faire - Answers-describes Smith's capitalistic system and implies that there
should be no government interference in the economy
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