External Environment: Everything outside an organizations boundaries that might affect
-Managers should have accurate understands of ! !
!environment and try to inﬂuence it
Economic Environment: Conditions of the economic system in which an organization
Three Key Goals of the Canadian Economic system: Economic growth, economic
!!!!!!!!stability, and full employment.
Economic Growth is Measured by : Aggregate output, standard of living, growth
!!!!!domestic product, and productivity.
Business Cycle: Patters of short-term ups and downs ( expansions and contractions) in
! ! an economy.
! ! -Four recognizable phases: peak, recession, trough, and recovery.
! ! -A recession is a period during which aggregate output declines.
!!!(measured by real GDP, declines)
! ! -Prolonged period of Recession leads to depression
-In later half of 1990s, Canadian economy continuously expanded, leading people to
believe that business cycle was a think of past. They learned their lesson hard when
stocks crashed in 2000.
Aggregate Output: -Main measure of growth in business cycle, the total quantity of
! ! goods and services produced by an economic system during a given
! ! period.
!!!-An increase in aggregate output is growth.
When output grows more quickly than population:
!!!-Output per capita- Quantity of goods/services per person goes
!!!up system provides relatively more of the goods and services
!!!-Results in higher standard of living
Standard of living: Total quantity and quality of goods and services that they can
! ! purchase with the currency used in 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.
! ! -When GDP increases, nation is experiencing economic growth.
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."
-Proﬁts earned by Canadian company abroad are included in GNP, but not GDP.
-Proﬁts earned by foreign ﬁrms in Canada are included in GDP because wages paid to
workers is Canadian.