Introduction To Business Skidmore Test 1

Introduction To Businessrd Skidmoretest 1introduction To Business

This test covers Chapters 1-4, Lecture Guide Weeks 1-3, and The Magic of Thinking Big by D. Schwartz, and is designed to assess understanding of basic business concepts, economic systems, and entrepreneurial principles through five questions. Students are required to answer each question completely, citing examples and relevant material, including chapter and page numbers where appropriate. The test must be submitted as a Word document, properly named, by the specified deadline, and answers should be written in a clear, organized manner to demonstrate comprehension of the topics.

Paper For Above instruction

Introduction

The study of business and economics provides foundational knowledge essential to understanding how societies organize economic activity and foster entrepreneurship. This paper addresses key topics such as the distinctions between macroeconomics and microeconomics, different economic systems, the role of competition and entrepreneurs, historical influences on the U.S. economy, the impact of currency devaluation, and the advantages of small businesses and franchising. Furthermore, it examines psychological concepts from "The Magic of Thinking Big" that influence personal and professional success. The discussion integrates theory with practical examples and relevant references to deepen comprehension of these fundamental concepts.

Macroeconomics and Microeconomics: Definitions and Differences

Macroeconomics and microeconomics are two primary branches of economic study that analyze different levels of economic activity. Macroeconomics focuses on the economy as a whole, examining aggregate indicators such as gross domestic product (GDP), unemployment rates, inflation, and fiscal and monetary policies. It aims to understand broad economic trends and how government policies influence overall economic stability and growth (Mankiw, 2014, p. 5). In contrast, microeconomics analyzes individual units within the economy, such as households, firms, and markets. It investigates how these entities make decisions regarding resource allocation, pricing, supply and demand, and competition (Krugman & Wells, 2018, p. 11). The fundamental difference lies in scale: macroeconomics considers the economy-wide phenomena, while microeconomics focuses on individual agents and markets.

The primary distinction between these branches is their scope. Macroeconomics deals with broad aggregates and policies affecting entire economies, while microeconomics addresses the behavior of individual economic units. While separate, the two are interconnected; microeconomic behaviors influence macroeconomic outcomes, and macroeconomic conditions impact micro-level decision-making (Blanchard, 2017).

Planned and Mixed Market Economic Systems: A Comparison and Contrast

Economic systems dictate how societies organize production, distribution, and consumption. A planned economy, also known as a command economy, is characterized by significant government control over economic activities. The government makes decisions about resource allocation, production targets, and prices, often through centralized planning agencies (Lipset, 2016). North Korea and the former Soviet Union exemplify planned economies, where state authorities direct economic activity to achieve government objectives.

Conversely, a mixed market economy combines features of both free enterprise and government intervention. In this system, private entities operate freely within a framework of government regulations and policies intended to address market failures, ensure fairness, and promote social welfare (Harvey, 2018). The United States exemplifies a mixed economy, with private businesses competing freely while the government intervenes in areas such as healthcare, education, and national security.

Differences between these systems include scope of control, mechanisms of decision-making, and flexibility. Planned economies tend to be less adaptable and often suffer from inefficiencies due to central planning. In contrast, mixed economies aim to balance the efficiency of markets with government oversight to correct inequalities and externalities.

While planned economies rely heavily on governmental directives, mixed economies leverage market mechanisms supplemented by regulatory policies. The effectiveness of each varies depending on implementation, cultural context, and economic goals (Stiglitz, 2010).

The Role of Competition and Entrepreneurs in a Private Enterprise System; Historical Development of the U.S. Economy

In a private enterprise system, competition and entrepreneurship are fundamental drivers of economic growth and innovation. Competition ensures that businesses strive to improve products, lower prices, and increase efficiency, ultimately benefiting consumers (Smith, 1776/2003). Entrepreneurs play a crucial role by creating new businesses, introducing innovations, and providing employment opportunities. They are risk-takers and visionaries who contribute to economic dynamism (Schumpeter, 1934). The U.S. economy exemplifies a capitalist system where competition and entrepreneurship are vital components.

Historically, the U.S. economy evolved from agrarian roots in the 18th century to an industrial powerhouse in the 19th and 20th centuries. Key influences included the availability of land, technological innovations such as the steam engine and electricity, and policy frameworks supporting free enterprise (North, 1990). The period of rapid industrialization was characterized by entrepreneurial ventures in manufacturing, transportation, and finance, leading to the development of a consumer-oriented economy. Regulatory reforms, antitrust laws, and technological advances have shaped the continuous development of the American economic landscape (Friedman & Friedman, 2002).

This evolution reflects an environment that encourages competition, innovation, and adaptation, foundational to the country’s economic resilience and growth.

The Impact of Currency Devaluation: German Currency and Foreign Debt

According to the article by Burkett, when a government chooses to print unsupported money, it effectively devalues its currency. The immediate effect of currency devaluation for Germany was a boost in exports because their goods became cheaper for foreign buyers, stimulating the export sector. However, devaluation also led to an increase in domestic inflation, raising the cost of imports and worsening debt burdens.

The cause-and-effect relationship here is often described as "inflationary devaluation." When the currency depreciates, a lender’s equity diminishes because the real value of the owed money decreases, reducing the lender’s purchasing power (Krugman & Obstfeld, 2009). For foreign-held debt, the devaluation means that the debtor nation must repay more in its depreciated currency, increasing the cost of debt service.

When debt is held by foreigners, and the monetary policy involves printing money, the borrowing government faces three options: (1) default on the debt, (2) negotiate restructuring, or (3) attempt to stabilize the currency and restore confidence through fiscal discipline (Feldstein, 2012). These choices involve trade-offs between economic stability, international relationships, and political stability.

Advantages and Disadvantages of Small Business and Franchising; Opportunities for Minorities and Women

Small businesses are vital to economic growth, job creation, and community development. Advantages include personalized customer service, flexibility, innovation, and local economic contribution (U.S. Small Business Administration, 2020). Disadvantages encompass limited resources, higher vulnerability to economic fluctuations, and challenges in scaling operations.

Franchising offers an advantageous model for entrepreneurs by providing a proven business concept, brand recognition, and ongoing support. However, disadvantages include franchise fees, lack of operational independence, and dependence on franchisor’s policies (Justis & Judd, 2003).

For minorities and women, small business opportunities are expanding due to increased access to resources, mentoring programs, and government initiatives aimed at reducing systemic barriers (Government Accountability Office, 2019). These opportunities foster economic empowerment and community development, although challenges such as access to capital, market discrimination, and limited networks remain significant hurdles.

Psychological Concepts Influencing Success from "The Magic of Thinking Big"

Schwartz introduces concepts like “success of belief,” “excusitis,” and “creative thinking and the action habit” that influence personal achievement. The “success of belief” posits that believing in oneself is fundamental to success; confidence leads to motivation and perseverance (Schwartz, 1959). “Excusitis” refers to making excuses for failures and shortcomings, which inhibits progress; overcoming excusitis is crucial for growth. “Creative thinking and the action habit” emphasize innovative ideas and taking consistent, positive actions to achieve goals.

These concepts are essential as they shape mindset and behavior. For example, believing in one’s abilities (success of belief) encourages goal setting and resilience. Personal application of excusitis involved recognizing when I was making excuses for setbacks, such as blaming external circumstances instead of seeking solutions, and actively working to shift my mindset to one of responsibility and proactive problem-solving.

Overall, Schwartz’s psychological principles underscore that success begins with mindset, reinforced through persistent action and mental discipline.

References

• Blanchard, O. (2017). Macroeconomics (7th ed.). Pearson.
• Feldstein, M. (2012). The Public Debt: The Old Question of Burden and the New Debate over Default. Journal of Economic Perspectives, 26(3), 3–24.
• Friedman, M., & Friedman, R. (2002). Capitalism and Freedom. University of Chicago Press.
• Harvey, J. (2018). Economic Systems: A Comparative Perspective. Routledge.
• Krugman, P., & Obstfeld, M. (2009). International Economics: Theory and Policy (8th ed.). Pearson.
• Krugman, P., & Wells, R. (2018). Economics (4th ed.). Worth Publishers.
• Lipset, S. (2016). Economic Planning and Market Economics. Harvard University Press.
• Mankiw, N. G. (2014). Principles of Economics (7th ed.). Cengage Learning.
• North, D. C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge University Press.
• Stiglitz, J. E. (2010). Freefall: America, Free Markets, and the Sinking of the World Economy. WW Norton & Company.
• Schumpeter, J. A. (1934). The Theory of Economic Development. Harvard University Press.
• U.S. Small Business Administration. (2020). Small Business Economic Profile. https://www.sba.gov
• Government Accountability Office. (2019). Small Business Opportunities for Minorities and Women. https://www.gao.gov
• Schwartz, D. (1959). The Magic of Thinking Big. New York: Scribner.