Chapter 2 Flashcards
What is an external environment?
Everything outside an organizations boundaries that might affect it.
What is organizational boundaries?
That which separates the organization from its environment.
Define an economic environment?
Conditions of the economic system in which an organization operates.
Define aggregate output.
It is the total quantity of goods and services produced by an economic system during a given period.
Define 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.
What is the business cycle?
It is the pattern of short-term ups and downs (expansion and contractions) in an economy.
Define recession and when it starts and ends.
Recession is two consecutive quarters when the economy shrinks.
Starts after the peak of the business cycle and ends when the trough is reached.
What does GDP stand for and what is it?
Gross Domestic Product
- refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production.
Explain real growth rates (GDP).
GDP calculated to account for changes in currency values and price changes.
Define GDP per capita and state the calculation.
GDP per person.
Total GDP / total population
What is real GDP?
GDP that has been adjusted.
Define Purchasing Power Parity.
The principle that exchange relates are set so that the prices of similar products in different countries are about the same.
Define balance of trade.
The economic value of all the products that a country exports minus the economic value of its imported products.
National debt is…
The amount of money that the government owes its creditors.
Define budget deficits.
The result of the government spending more in one year than it takes in during that year
Define stability.
The amount of money available and the quantity of goods and services produced are growing at about the same rate.
Define inflation.
Occurrence of widespread price increases throughout an economic system.
What does the consumer price index (CPI) measure?
The prices of typical products purchased by consumers living in urban areas.
Deflation is…
The period of generally falling prices.
What is unemployment?
The level of joblessness among people actively seeking work.
List the 4 kinds of unemployment.
- Fractional unemployment
- Seasonal unemployment
- Cyclical unemployment
- Structural unemployment
What are fiscal policies?
Policies whereby governments collect and spend revenues.
What are monetary policies?
Policies whereby the government controls the size of the nations money supply.
Define basic (or pure) R&D.
Improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable.
