pineda
Chapter Two
Economics: The Framework for Business
1. What steps did the Federal government and the Federal Reserve take to mitigate the crisis?
Intervened in the economic at an unprecedented level to prevent total financial disaster.
2. Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.
Both “macroeconomics” and “microeconomics” have played an integral role in the global economic crisis.
3. What is the difference between fiscal and monetary policy? What role does politics play in shaping these policies?
“Fiscal” means refers to government efforts to influence the economy through taxation and spending and “monetary policy” means Federal Reserve decisions that shape the economy by influencing interest rates and the supply of money.
Politics have a role in bailing out and propping up shaky financial firms during the economic crisis.
4. Describe the 4 degrees of competition within the free market system. Offer 2 to 3 examples of each type of competition.
* Pure competition: is a market structure with many competitors selling virtually identical products. Example: agriculture probably comes closest.
* Monopolistic competition: a market structure with many competitors selling differentiated products. Example: include the clothing industry and the restaurant business.
* Oligopoly: a market structure with only a handful of competitors selling products that can be similar or different. Example: the soft drink industry, computer business and network television.
* Monopoly: a market structure with just a single producer completely dominating the industry, leaving no room for any significant competitors. Example: monopolies can harm the economy most are illegal according to federal legislation.
Economics: The Framework for Business
1. What steps did the Federal government and the Federal Reserve take to mitigate the crisis?
Intervened in the economic at an unprecedented level to prevent total financial disaster.
2. Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.
Both “macroeconomics” and “microeconomics” have played an integral role in the global economic crisis.
3. What is the difference between fiscal and monetary policy? What role does politics play in shaping these policies?
“Fiscal” means refers to government efforts to influence the economy through taxation and spending and “monetary policy” means Federal Reserve decisions that shape the economy by influencing interest rates and the supply of money.
Politics have a role in bailing out and propping up shaky financial firms during the economic crisis.
4. Describe the 4 degrees of competition within the free market system. Offer 2 to 3 examples of each type of competition.
* Pure competition: is a market structure with many competitors selling virtually identical products. Example: agriculture probably comes closest.
* Monopolistic competition: a market structure with many competitors selling differentiated products. Example: include the clothing industry and the restaurant business.
* Oligopoly: a market structure with only a handful of competitors selling products that can be similar or different. Example: the soft drink industry, computer business and network television.
* Monopoly: a market structure with just a single producer completely dominating the industry, leaving no room for any significant competitors. Example: monopolies can harm the economy most are illegal according to federal legislation.