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Date: 5/30/06
Class: Intro to Business BA11 5040
Professor: McNamara
What are some of the diverse groups of people that managers must manage?
Some of the people that managers now have to manage are quite different than they used
to be even 50 years ago. Today there are many women and people of different races in
the work place today. Companies that are hiring diverse work forces are gaining
perspectives from peoples with different cultures and ways of life that may not have been
experienced inside of the company before.
What is a major factor that caused people to move from farming to industry and from
industry to the service sector?
The most outstanding factor that has caused people to move from farming to industry and
from industry to the service sector is technology. With the fast improvements in
technology production has boomed in any industry it touches. For example one industry
that comes to mind is farming. In the 1800’s farming was the mainstay of the economy,
then with the invention of the harvester, cotton gin and many other production boosting
tools, the amount of people required to do the same amount of work dropped drastically
creating a need for another industry. This gave way to manufacturing. In this industry
people that used to farm are now producing the machines that replaced them and are also
maintaining them. Now the US is primarily a service economy which means it is
producing intangible goods. Intangible goods are services such as legal, finance and
entertainment just to name a few.
What are the four basic rights that people have under free-market capitalism?
The four basic rights people have under free-market capitalism are as follows:
The right to private property. This is the most fundamental of al rights under capitalism.
It means that individuals can buy, sell and use land, builds, machinery and other forms of
property. The can also pass property on to their children. The right to own a business
and to keep all of that business’s profits. Profits are defined as revenue minus expenses.
The right to freedom of competition. Within certain guidelines established by the
government, individuals are free to compete with other individuals or businesses by
offering new products and promotions. To survive and grow businesses need laws and
regulations. Finally the right to freedom of choice. People are free to choose where they
want to work and what career they want to follow. Other freedoms of choice include
where to live and what to buy or sell.
Name the three economic indicators and describe how well the United Sates is doing
based on each indicator.
The three economic indicators are as follows Gross domestic Product, the unemployment
rate and the price indexes. The US is doing well in the area of GDP. The US used to use
GNP which was the amount of product produced by American companies no matter
where the facilities were located. Other countries were using GDP so the US went along
which makes it easier for countries to compare statistics about their economies. In the
early 2000’s US GDP was around 10 trillion dollars. The unemployment rate refers to the
number of civilians at least 16 years old who are unemployed and tried to find a job
within the prior four weeks. In 2000 the U.S. unemployment rate reached its lowest in
over 30 years with a rate of 3.9 percent, but the rate rose rapidly to over 6 percent as a
result of the economic slowdown of 2002-2003. Finally the third factor is the price
indexes. The price indexes help to measure the health of the economy by measuring the
levels of inflation, disinflation, deflation and stagflation. Inflation refers to a general rise
in the prices of goods and services over time. Rapid inflation is quite scary due to the
fact that people are able to purchase less with the money the have. Disinflation describes
a condition where price increases are slowing down. From looking at the graph on page
54 it shows a direct correlation between disinflation and employment. Since the U.S. was
in a period of disinflation for most of the 1990’s unemployment fell. Now deflation is
where prices of goods and services actually drop. It occurs when there are so many
goods and services produced that people cannot afford them all. The consumer price
index CPI consists of monthly statistics that measure the pace of inflation or deflation.
Costs of about 400 goods and services including housing, food and apparel are part of the
figure. Lastly you have the producer price index PPI. This measures prices at the
wholesale level.
How does the government manage the economy using fiscal policy?
First of all fiscal policy refers to the governments efforts to keep the economy stable by
increasing or decreasing taxes or government spending. The first half of fiscal policy
deals with taxation. Theoretically high taxes tend to slow the economy because they
draw money away from the private sector. The second half of fiscal policy refers to
government spending. The government spends money on highways, social programs,
education and defense just to name a few. Sometimes the government spends more than
it takes in which creates a deficit which in my opinion the government is pretty good at
doing since the national debt has been on the rise for as long as I have been alive. One
way to lessen the debt would to be to cut the amount of spending the government does
another would be to raise taxes.
What does the term monetary policy mean? What organization is responsible for the
monetary policy?
Monetary policy refers to the management of the money supply and interest rates. The
policy is controlled by the Federal Reserve System. The most obvious role of the Federal
Reserve is the raising and lowering of interest rates. When the economy is booming the
Fed will raise interest rates making money more expensive to borrow which will slow the
boom down. The Fed also controls money supply. A simple explanation is that the more
money the Fed makes available to businesspeople and others, the faster the economy
grows. The slow the economy the Fed lowers the money supply.