Supply and Demand
According to the law of demand, what usually happens to demand when the price of a product increases?
Demand decreases.
What does GDP stand for?
Gross Domestic Product.
Name the four stages of the business cycle.
Prosperity, recession, depression, recovery.
What are the four major parts of a business plan?
Business Description, Management Plan, Marketing Plan, and Financial Plan
In which economic system does the government make most major economic decisions?
Command economy
What happens to the price of a product when demand is high but supply is low?
Price usually increases.
What does GDP measure?
The value of final goods and services produced within a country during a certain period.
During which stage are businesses generally doing well, people are spending more, and unemployment is low?
Prosperity.
Nike decides to manufacture 2 million pairs of basketball shoes instead of 1 million football cleats. Which economic question is being answered?
What to produce?
In a country, most businesses are privately owned and consumers choose what they buy, but the government still regulates businesses and provides public services. What type of economic system is this?
Mixed economy
A store has 500 Tennessee football shirts left after the season ends, but very few customers want them. What will likely happen to the price?
The price will decrease.
What term describes a general increase in prices over time?
Inflation.
Businesses are experiencing declining sales, production is decreasing, and companies have started laying off employees. What stage is this?
Recession
A car company decides to replace some assembly-line workers with robots. Which economic question is being answered?
How to produce?
In which economic system do individuals and businesses make most economic decisions based on supply and demand?
Market economy.
A new gaming console becomes extremely popular, but manufacturers cannot produce enough to meet customer demand. Explain what will likely happen to its price.
Price will increase because demand exceeds supply.
The prices of groceries, gas, clothing, and other products are increasing while people's pay stays the same. What economic problem are consumers experiencing?
Inflation / reduced purchasing power.
Unemployment is still high, but companies have started hiring again, consumer spending is increasing, and production is beginning to rise. What stage is this?
Recovery
Sarah gives a new business $50,000 in exchange for 10% ownership of the company. Is Sarah an investor or a lender?
Investor
A country's citizens can own businesses and choose what products they buy, but the government also collects taxes, regulates businesses, and provides services. What economic system is this?
Mixed economy.
A restaurant lowers the price of its burgers from $12 to $8. Nothing else changes. According to the law of demand, what should happen to the quantity of burgers customers want to buy, and why?
Quantity demanded should increase because consumers generally buy more at lower prices.
Country A produces more goods and services this year than it did last year. Its GDP increases from $500 billion to $540 billion. What does this suggest about its economy?
Economic production/output has grown.
A factory lays off 500 employees. Those employees have less money to spend, causing local restaurants and stores to lose customers and potentially lay off their own workers. What concept does this demonstrate?
The ripple effect of an economic downturn/recession
A company has a strong product, experienced managers, and a detailed advertising strategy, but it doesn't know its startup costs, expenses, or expected revenue. Which part of its business plan is weak, and why could that prevent it from receiving a loan?
Financial Plan; lender needs financial information to evaluate whether the business can afford its costs and repay the loan.
Two countries face the same shortage. In Country A, the government determines how much businesses can produce and where the products will go. In Country B, businesses increase production because higher prices create an opportunity for profit. Which economic system does each country most closely represent?
Country A = Command
Country B = Market.
The economy begins slowing down. Businesses experience lower sales, companies cut production and lay off workers, and GDP decreases.
A. What stage of the business cycle is occurring?
B. What is happening to unemployment?
C. Why might lower consumer demand cause businesses to produce fewer goods?
A. Recession
B. Unemployment increases.
C. Businesses produce less when consumers are buying fewer goods because they don't want excess inventory and lower sales reduce the need for production.