Textbook Notes (290,000)
CA (170,000)
UTSC (20,000)
Chapter 2

Chapter 2 Notes

Course Code
William Seager

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Chapter 2 Notes
External Environment – everything outside an organizations boundaries that might
affect it
Economic Environment - conditions of the economic system in which an organization
- business has an “inside (us) aboundary” and an “outside (them)
Typical Environments:
Economic environment
Technological environment
Social environment (diff customs)
Political environment
Legal environment
Three Key Goals of the Canadian Economy
1. economic growth – produce more of wants, ppl spend more, profits-> better SofL
2. economic stability
3. full employment
Measure Economic Growth
aggregate output
standard of living
gross domestic product
Growth Means:
-Produce more
-Being more efficient
Threats: inflation, deflation and unemployment
Business Cycle – pattern of short-term ups and downs (expansions and contractions) in
an economy
Recession- period during which aggregate out-put, as measured by real GDP, declines
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Depression- particularly severe and long-lasting recession
main measure of growth in the business cycle is aggregate output
Aggregate output – total quantity of goods and services produced by an economic
system during a given period – **when output rises STof living rises
Standard of living – total quantity and quality of goods and services that a countries
citizens can purchase with the currency used in their economic system
GDP – total value of all goods and services produced within a given period by a national
economy through domestic factors of production ( consumer spending, government
spending, business investments, and net exports) – FINAL GOODS ONLY
GNP – total value of all goods and services produced by a national economy within a
given period of regardless of where the factors of production are located
E.g, profits of a Canadian company in Brazil, count towards GNP, because its outside of
Canada. Meanwhile profits of a Brazilian company in Canada counts towards CDN GDP
GDP per Capita – GDP divided by population a amount of GDP per person
Nominal GDP – GDP measured in current dollars or with all components valued at
current prices
Real GDP – GDP calculated to account for changes in currency values and price changes
Purchasing power Parity – principle that exchange rates are set so that the prices of
similar products in different countries are about the same
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