Economic Environment Learning objectives Assignment PDF
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Added on 2021-07-28
Economic Environment Learning objectives Assignment PDF
Added on 2021-07-28
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MGMT 1101 – Week 6 Lecture Notes The Economic Environment Learning objectives: -To understand the relevance of demand factor conditions to international business -To assess the economic development of countries -To analyse and compare national economies in terms of risks/attractiveness
Gross Domestic Product GDP is the market value of all final goods and services produced within a country in a given period of time -Market value = market prices people are willing to pay oPrices of G+S -Comprehensive and includes everything produced and sold in the economy, but excludes things that do not enter the ‘legal’ market -Intermediate goods vs. final goods the price of final goods include the value of intermediate goods, unless intermediate goods are added to inventory -Currently produced = used car sales do not count... -Within a country (boundary) -Given period: usually in a year or quarter Components of GDP i)Consumption -Spending on G+S by households with the exception of purchases of new housing -Spending on education is all seen as consumption, not investment ii)Investment -Purchase of goods to be used in the future production of goods and services iii)Government purchases -Include things like salaries for government employees -But transfer payment not part of government purchases iv)Net exports -Total exports minus total imports GDP = Consumption + Investment + Government Purchases + Net Exports Real vs. Nominal Gross Domestic Product -One of the objectives of economic development is to facilitate a rise in GDP at a high rate -2 reasons for the rise in GDP o1. Producing more output of G+S o2. Higher prices -Real GDP – the production of G+S valued at constant prices (that is, holding prices constant at some base year)
-GDP deflator (Nominal GDP/Real GDP *100) measures the change in nominal GDP that cannot be explained by a change in real GDP What is GDP good for? What are the problems associated with GDP? GDP does not measure: Quality of life -Leisure or how much do citizens work -Happiness -Health Things that take place outside markets -Produced at home -Child care by parents at home -Volunteer work Quality of the environment -GDP excludes the damage to society -Productive, economic activities that are not environmentally sustainable Distribution of income -Inequality -Fairness and justice GDP is good as a measure of economic well-being and volume of economic activities, but there are limitations, particularly with regards to human well-being and sustainability
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