Textbook Notes (363,460)
Canada (158,372)
MGTA01H3 (583)
Chapter 2

BUSINESS CUSTOM 2/E VOL. 1 Chapter 2 Readings (very detailed and helpful)

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 2: Understanding the Environments of Business The economic environment o External environment: everything outside an organizations boundaries that might affect it o Economic environment: conditions of the economic system in which an organization operates Economic growth o Business cycle: pattern of short-term ups and downs (expansions and contractions) in an economy o has four phases: peal, recession, trough, recovery o periods of expansion and contraction can vary from several months to several years Recession: period during which aggregate output, as measured by real GDP, declines Depression: particularly severe and long-lasting recession Aggregate output and the standard of living o Aggregate output: total quantity of good and services produced by an economic system during a given periodmain measure of growth in a business cycletherefore an increase in aggregate output is growth (or economic growth) When output grows more quickly than pop. two things followoutput per capita ( the quantity of goods and services per person) goes up and the system provides more of the goods and services that people want o Standard of living: total quantity and quality of goods and services that a countrys citizens can purchases with the currency used in their economic systemgrowth makes possible higher standards of living Gross domestic product o GDP: total value of all goods and services produced within a given period by a national economy through domestic factors of productionprofits earned by foreign firms in Canada are included in GDP o 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 locatedprofits earned by a Canadian company abroad are included in GNP o GDP and GNP allow us to track an economys performance over time o Real growth rates: The real growth rate of GDPthe growth rate of GDP adjusted for inflation and changes in the value of the countrys currencyis what counts Note: growth depends on output increasing at a faster rate than populationif growth rate of GDP exceeds rate of pop. growth, then standard of living rises o GDP per capita: means GDP per person Formula: divide total GDP by total pop. of a country GDP per capita is better than GDP when it comes down to looking at an average person in a country www.notesolution.com
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