Key Economic and Business Terms Defined

Posted on Feb 6, 2025 in Economy

Macroeconomics and Microeconomics

Macroeconomics is the study of national and global economies.

Microeconomics is the study of the decisions made by individuals and businesses.

Market Economy: An economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices.
Market Price: The price at which the quantity demanded is exactly equal to the quantity supplied.

Mixed Economy: An economy that exhibits elements of both capitalism and socialism.
Monetary Policy: The Federal Reserve’s decisions that determine the size of the supply of money in the nation and the level of interest rates.

Monopolistic Competition: A market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products.
Monopoly: A market or industry with only one seller, and there are barriers to keep other firms from entering the industry.
Oligopoly: A market or industry in which there are few sellers.
Perfect Competition: A market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product.

Multilateral Development Bank (MDB): An internationally supported bank that provides loans to developing countries to help them grow.
Multinational Enterprise: A firm that operates on a worldwide scale without ties to any specific nation or region.
Non-Tariff Barrier: A non-tax measure imposed by a government to favor domestic over foreign suppliers.

National Debt: The total of all federal deficits.
Producer Price Index (PPI): An index that measures prices that producers receive for their finished goods. Note: This definition appeared twice in the original text and has been included only once here.
Product Differentiation: The process of developing and promoting differences between one’s product and all similar products.
Productivity: The average level of output per worker per hour.
Profit: What remains after all business expenses have been deducted from sales revenue.
Recession: Two or more consecutive three-month periods of decline in a country’s GDP.
Sarbanes-Oxley Act of 2002: Provides sweeping new legal protection for employees who report corporate misconduct.
Service Economy: An economy in which more effort is devoted to the production of services than to the production of goods.

Minority: A racial, religious, political, national, or other group regarded as different from the larger group of which it is a part and that is often singled out for unfavorable treatment.
Pollution: The contamination of water, air, or land through the actions of people in an industrialized society.
Social Audit: A comprehensive report of what an organization has done and is doing with regard to social issues that affect it.
Social Media: The online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services.
Social Responsibility: The recognition that business activities have an impact on society and the consideration of that impact in business decision-making.