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MGTA01H3 (583)

Ch 2 Notes

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Management (MGT)
Chris Bovaird

Wednesday, September 23, 2009 TN: Chapter 2 [MGTA03] The Economic Environment External Environment: everything outside an organizations boundaries that might affect it Therefore, managers have to be proactive and react to the environment changes Economic Environment: conditions of the economic system in which an organization operates Economic Growth I. The Business Cycle: pattern of short-term ups and downs in an economy which show growth 1. Recession: period where aggregate output declines 2. Depression: long-lasting recession II. Aggregate Output and Standard of Living 1. Aggregate output: total quantity of goodsservices produced by an economic system 2. When aggregate output increases, output per capita increases, which increases the standards of living III. GDP & GNP 1. Gross Domestic Product: total value of all goodsservices produces within a given period by a national economy through domestic factors of production 2. Gross National Product: total value of all goodsservices produced by a national economy within a given period regardless of where the factors of production are located 3. Genuine Progress Indicator: treats activities that harm the environment or quality of life as costs and gives them negative values 4. Real Growth Rates: GDP which was adjusted for inflation and changes in the value of currency (since growth depends on output not a rise in price or currency) 5. Nominal GDP: GDP measured in current dollars or components valued at current price 6. GDP per Capita: GDP per person, the higher the amount the higher the standards of living 7. Pur
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