Business Environment Flashcards
Business
an organisation that provides goods or services to
earn profits
Profits
the positive difference between a business’s revenues
and its expenses
Dimensions of External Environment
- Technological
- Socio-Cultural
- Domestic Business
- Global Business
- Political-Legal
- Economic
External Environment
everything outside an organisation’s boundaries
that might affect it
Economic Systems
a nation’s system for allocating its resources
among its citizens, both individuals and
organisations
Factors of Production - Definition
the resources that a country’s businesses use to
produce goods and services
Factors of Production - The factors
- Labor
- Capital
- Entrepreneur
- Physical Resources / (assets)
- Information Resources
Types of Economic Systems
- Planned Economy
- Market economy
- Mixed market economy
Planned Economy
an economy that relies on a centralised government
to control all or most factors of production and to
make all or most production and allocation
decisions
Market economy
individual producers and consumers control
production and allocation by creating
combinations of supply and demand
Mixed market economy
features characteristics of both planned and
market economies
Demand
the willingness and ability of buyers to purchase a product (a good or a service)
Supply
the willingness and ability of producers to offer a good or service for sale
Economic Indicators
statistics that show whether an economic system
is strengthening, weakening, or remaining stable
Business cycle
the pattern of short-term ups and downs (or
expansions and contractions) in an economy
Aggregate Output
the total quantity of goods and services produced
by an economic system during a given period
the primary measure of growth in the business cycle*
Standard of Living
the total quantity and quality of goods and
services that people in a nation can purchase with
the currency used in their economic system
Gross domestic product (GDP)
refers to the 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)
refers to the 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
Productivity
the measure of economic growth that compares how
much a system produces with the resources
needed to produce it
Balance of trade
the economic value of all the products that a
country exports minus the economic value of its
imported products
National Debt
the amount of money the government owes its
creditors
Stability
condition in which the amount of money
available in an economic system and the quantity of goods and services produced in it are growing at about the same rate
Inflation
occurs when widespread price increases occur throughout an economic system
Unemployment
the level of joblessness among people actively
seeking work in an economic system
Recession
a period during which aggregate output, as measured
by GDP, declines
Depression
a prolonged and deep recession
Stabilisation Policy
government economic policy intended to smooth
out fluctuations in output and unemployment
and to stabilise prices
Fiscal Policies
policies used by a government regarding how it
collects and spends revenue
Monetary Policies
policies used by a government to control the size
of its money supply
