External environment- everything outside an organization"s boundaries that might affect it. Management needs to have a better understanding of the environment facing their company and strive to operate and compete within in. Economic environment- refers to the conditions of the economic system in which an organization operates. The canadian economic system has 3 goals: economic growth, economic stability, and full employment. The pattern of short term ups and downs in an economy is called the business cycle. Business cycle- pattern of short term ups and downs (expansions and contractions) in an economy. Recession- period in 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. When output grows quickly than the population two things can follow: Output per capita- the quantity of goods and services per person goes up. System provides relatively more of the goods and services they want.