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Chapter 2

Chapter 2 notes (What I used to study for final)

Management (MGT)
Course Code
Chris Bovaird

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Chapter 2
External environment: everything outside an organizations boundaries that might affect it
Economic environment: conditions of the economic system in which an organization operates
Business cycle: patterns of short-term ups and downs in an economy
Recession: aggregate outpout declines
Depression: long-term recession
Aggregate output: total quantity of goods and services produced by and economic system in a
given period
Standard of living: total quantity and quality of goods and services that a countrys citizens can
purchase with the cur rency used in their system
Gross Domestic Product: Total value of all goods and services produced within a given period by
a national economy t hrough domestic factors of production
Gross national product: total value of all goods and services produced by a national economy
regardless of where it is happening
Nominal GDP: measured in current dollars or with all component valued at current pr ices
Purchasing power parity: gives us a better understanding of standard of living around the world
(how much stuff you can buy with the value of your dollar)
Productivity: measure of economics growth that compares how much a system produces with the
resource needed to purchase it
Balance of trade: expor ts-imports
National debt: amount gov owes its creditors
Budget deficit: spending more money than you receive in the year
Stability: amount of money available and the quantity of goods and services produced are
growing at about the s ame rate
Factors threatening stability –
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