Textbook Notes (363,094)
Canada (158,187)
MGTA01H3 (583)
Chapter 2

Chapter 2

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 2 Understanding the Environments of BusinessEconomic Environment Termsexternal environment everything outside an organization that might affect it economic environment conditions of the economic organization in which the organization operatesEconomic Growth Terms business cycle pattern of short term ups and downs expansions and contractions in an economyrecession period during which aggregate output measured by real GDP declinesaggregate output total quantity of goods and services produced by an economic system during a given periodstandard of living total quantity and quality of goods and services that a countrys citizens can purchase with the currency in their economic systempurchasing power parity PPPis the principle that exchange rates are set so that the prices of similar products in different countries are about the sameproductivity measure of economic growth that compares how much a system produces with the resources needed to produce itnational debt the total amount of money that the government owes its creditorsbudget deficit the result of the government spending more in one year than it takes in during that yearGross Domestic Product GDPtotal value of all goods and services produced within a given period by a national economy through domestic factors of production If GDP goes up the country experiences economic growth The value of products and services produced by foreign firms in Canada is also included in GDP GDP is the more preferred method of calculating national income and outputreal growth rate of GDPthe growth rate of GDP adjusted for inflation and changes in the value of the countrys accuracy is what countssince growth depends on output increasing at a faster rate than population if the growth rate of GDP exceeds the rate of population growth then the standard of life is improvingGDP per capita means GDP per person and is determined by dividing total GDP by total population of a country and is considered to be a better measure of economic wellbeing than GDPreal GDP means that the GDP has been calculated to account for changes in currency values and price changes nominal GDP means that GDP is measured in current dollars or with all components measured at current prices Gross National Product GNP
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