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Lecture 2

Week 2 BU111.docx

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Department
Business
Course
BU111
Professor
Sofy Carayannopoulos
Semester
Fall

Description
BU111 Chapter 2-Overview of the Business Environment –PEST Five Forces Week 2 External Environment-everything outside an organization’s boundaries that might affect it Organizational Boundary-that which separates its organization from its environment Economic Environment-conditions of the economic system in which an organization operates Aggregate output-total quantity of goods and services produced by an economic system during a given period Standard of Living-total quantity and quality of goods and services that a country’s citizens can purchase with the currency used in their economic system Business Cycle-pattern of short term ups and downs(expansions and contractions) in an economy Gross Domestic Product (GDP)-total value of all goods and services produced within a given period by a national economy through domestic factors of production Gross National Product (GNP)-Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located GDP per Capita-gross domestic product per person Real GDP-GDP calculated to account for changes in currency values and price changes Nominal GDP-GDP measured in current dollars or with all components valued at current prices Purchasing Power Parity-principle that exchange rates are set so that the prices of similar products in different countries are about the same Productivity-Measure of economic growth that compares how much a system produces with the resources needed to produce it Balance of Trade-the total of a country’s exports (sales to other countries) minus its imports (purchases from other countries) National Debt-the total amount of money that a country owes its creditors Budget Deficits-the result of the government spending more in one year than it takes in during that year Stability-condition in an economic system in which the amount of money available and the quantity of goods and services produced are growing at about the same rate Inflation-occurrence of wide-spread price increases throughout an economic system BU111 Chapter 2-Overview of the Business Environment –PEST Five Forces Week 2 Consumer Price Index (CPI)-Measure of the prices of typical products purchased by consumers living in urban areas Deflation-a period of generally falling prices Unemployment-the level of joblessness among people actively seeking work in an economic system Fiscal Policies-policies whereby governments collect and spend revenues Monetary Policies-policies whereby the government controls the size of the nation’s money supply Technology-all the ways firms create value for their constituents Research and Development-Those activities that are necessary to provide new products, services, and processes Basic (or Pure) R&D-Improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable Applied R&D-Focusing speci
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