Chapter 1 notes

1. What are four resources that affect business success?

Interpersonal skills, analytic skills, technical skills, and conceptual
skills.

2. What does every business need to stay in business?

To be successful, business owners must possess many of the same
characteristics that successful employees have, and they must be
willing to work hard and put in long hours.
3. What is a stakeholder? List four stakeholders in business.
A stakeholder is all the different people or groups of people who are
affected by an organizations policies, decisions, and activities.
Owners, managers, customers, and suppliers.
4. What are two risks in owning a business?
Financial risks and personal sacrifice
5. What is the difference between microeconomics and macroeconomics?
Microeconomics is the study of the decisions made by individuals and
businesses. Microeconomics, for example, examines how the prices of
homes affect the number of homes individuals will buy.
6. What are the (inputs) factors of production?
Land and natural resources, labor, capitol, and entrepreneurship.
7. Explain the difference between the following economic systems:
a. Capitalism: an economic system in which individuals own and
operate the majority of businesses that provide goods and
services.
b. Socialism: key industries are owned and controlled by the
government
c. Communism: society whose citizens together owned all
economic resources. All workers would then contribute to this
communist society according to their ability and would receive
benefits according to their needs.

8. Define Gross Domestic Product.

The total dollar value of all goods and services produced by all people
within the boundaries of a country during a one-year period.
9. Define National Debt
The total amount of money that a countrys government has borrowed,
by various means.
10.
What is the term to define general price increases of products
and services?
Inflation.

11.
What is a recession?
Two or more consecutive three-month periods of decline in a countrys
GDP.
12.
What is the purpose of the Federal Fiscal policy?
Government influence on the amount of savings and expenditures;
accomplished by altering the tax structure and by changing the levels
of government spending.

13.
What is the purpose of the Federal Reserve monetary policy?
The Federal Reserve sets the nations monetary policy to promote the
objectives of maximum employment, stable prices, and moderate longterm interest rates.
14.
What is the point where the supply and demand curve
intercepts?
Market price.

15.
What are the four degrees of competition?
Pure competition, monopolistic competition, oligopoly, and monolopy.