Textbook Notes (362,810)
Canada (158,054)
MGTA01H3 (583)
Chapter 2

Chapter 2 notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 2 Notes Understanding the Environments of Business Point to remember: Growth depends on output increasing at a faster rate than the population itself. Economic environment: the conditions of the economic system in which business firms operate Purpose of an economic system is to produce profits, and make things people want so people will buy them. Aggregate output: the growth of business (total amount of products or services given) in an economic system during a given period of time Business cycle: the ups and downs in the economic system. Peak Recession Trough Recovery Recession: period of time where the aggregate output is negative Depression: an extended recession Aggregate output is positive, the output per capita (i.e. the amount of goodsservices produced per person) goes up, and hence the standard of living goes up as people benefit from being able to access the quality and quantity of goods that they want. Standard of living: is defined as the total quantity and quality of goods that the citizens can buy with the currency in their economy Aggregate output standard of living GDP: total $$ value of all goods and services produced by a country domestically in a year. GDP economic growth Countries with the largest GDP in 2010: US, China, Japan Growing GDP people making more stuff that is wanted, hence more profits, and +ve growth Fallling GDP: people making less stuff due to various reasons, e.g. the economy is in recession, people dont want to spend the moneydont have the money to spend in factors of production to produce anything, therefore they gain no profit, GDP falls, economic growth goes ve www.notesolution.com
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