External environment: everything outside an organization"s boundaries that might affect it. Economic environment: conditions of the economic system in which an organization operates. Business cycle: pattern of short term ups and downs (expansions and contractions) in an economy. four recognizable phases: peak, recession, trough, and recovery. Recession: period during which aggregate output, as measured by real gdp, declines. Aggregate output: total quantity of goods and services produced by an economic system during a given period. Standard of living: total quantity and quality of goods and services that a country"s citizens can purchase with the currency used in their economic system. Gross domestic product (gdp): total value of all goods and services produced within a given period by a national economy through domestic factors of production. 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 located.