REVIEWER: FINANCIAL MANAGEMENT
BUSINESS KNOW-HOW- Knowledge and
MIDTERM EXAM
1. MACROECONOMICS- Study of national
economy and determination of national
income. Involves the major sector of national
economy. Households, business firms,
government and foreign sector
2. NOMINAL GROSS DOMESTIC PRODUCT- Price
of all goods and services produced by a
domestic economy for a year at current market
prices.
3. REAL GDP- Price of all goods and services
produced by the economy at price level
adjusted prices. Adjustment eliminates the
effect of inflation.
4. POTENTIAL GDP- Maximum amount of
production that could take place in an
economy.
5. NET DOMESTIC PRODUCT- GDP minus
depreciation
6. GROSS NATIONAL PRODUCT- Price of all goods
and services produced by labor and property
supplied by the nation.
7. THE INCOME APPROACH- Adds ups all income
earned in the production of final goods and
services such as wages, interests, rents,
dividends.
8. THE EXPIDENTURE APPROACH- Adds up all
expenditures to purchase final goods and
services by households, businesses and
government.
9. THE MULTIPLIER- refers to the fact that an
increase in spending by consumers, businesses
or the government has a multiplied effect on
equilibrium GDP.
10. LABOR- Inputs supplied by the various types of
workers that enables a business to function.
11. CAPITAL- Long-lived physical equipment,
software and structures used in production
process.
12. LAND- Actual ground used by a business.
13. INTERMEDIATE OUTPUTS- Any goods or
services purchased from other businesses and
used up in production
14.
technology necessary for production.
15. BUSINESS CYCLE- Fluctuation in aggregate
economic output that lasts for several years.
16. THE PEAK- date on which the recession starts,
when economy hit high points and starts
heading downward. marks the end of economic
expansion.
17. A RECESSION- Period of negative GDP growth.
Usually refers at least two consecutive quarter
of negative GPD growth.
18. THE TROUGH- Date on which the recession
ends and economy starts heading up again.
19. THE EXPANSION- Time from trough through
recovery and all the way to the next peak.
20. FISCAL POLICY- refers to decision about
government spending taxes and debt in both
short run and long run
21. INFLATION- Sustained upward movement in
average prove level goods and services, usually
measured annual basis.
22. DEFLATION- Described as the decrease in the
price levels. Is very damaging because
businesses do not want to borrow money and
pay it back with money that has no more
purchasing power.
23. DEMAND-PULL INFLATION- Aggregates
spending exceeds the economy’s normal full-
employment output capacity.
24. COST-PULL INFLATION- Increase in the cost
producing goods and services usually
characterized by decreases in aggregate output
and employment.
25. COMPETITION- A dynamic process means,
rivalry or competitiveness between among
parties to deliver a better deals to buyer in
terms of quality, price and product information.
26. MONOPOLY- Single seller of a well-defined
product for which there are no substitute
goods.
27. OLIGOPOLY- Few sellers. Has small number of
rival firms and interdependence among sellers
because each is large relative size of the market
28. PUBLIC SECTOR ENTERPRISE(PSE)- Business
undertaking owned, controlled and managed by
 the state on behalf of and or the benefit of the
public at large.
29. DISINVESTMENT- Process in which PSE reduces
its portion in equity by disposing iys
shareholdings.
30. PRIVATIZATION- means giving entire
management control over PSE to private
enterprising.
31. FINANCIAL MARKETS- Meeting place for
people, corporation and institutions that either
need money or have money to lend or invest.
32. STOCK MARKETS- Securities that are already
outstanding and owned by the investors are
usually bought and sold through secondary
market which is popularly known as stock
market.
33. THE STOCK EXCHANGE- An organized
secondary market where securities and such
other local authorities are purchased and sold.
34. LISTING- Means admission of securities to
dealings on recognized stock exchange of any
incorporated company, central and state
governments, quasi-governmental and other
financial institutions.
35. MANAGED FLOAT- Is current method of
exchange rate determination.
36. BALANCE OF PAYMENTS- Includes all
international payments made by one nation to
another, including those imports, exports,
investments, unilateral transfer and capital
movements.
37. COMPOUNDING- The process of determining
the future value when interest is applied.
38. INTRA-PERION COMPOUNDING- Compounding
that occurs more than once a year.
39. ANNUITY- Is a sequence of equal payments
made at equal intervals of time.
40. PERIOD OF DEFERMENT- The length of time
from the present to beginning of the first
payment interval.