Commowealth of Learning Executive 
                                                     MBA/MPA 
                                                              
                                     Economic Environment of Business 
                                                              
                                                              
                                                  Block Contents 
                   
                  Block 1    :    Introduction of the Economic Environment 
                  Block 2    :    Measures of Economic Activity 
                  Block 3    :    Understanding the Market Meachanism and Analysing Market Demand 
                  Block 4    :    Market Demand and Pricing Decisions 
                  Block 5    :    Production, Costs and Profit 
                  Block 6    :    Market Structure 
                  Block 7    :    Aggregate Demand, Aggregate Supply and Economic Fluctuation 
                  Block 8    :    Inflation and Unemployment 
                  Block 9    :    Financial Markets, Monetary and Fiscal Policy 
                  Block 10  :     The Open Economy 
                   
                                                                    
                                                                    
                           Commonwealth of Learning Executive MBA/MPA 
                                  C5 Economic Environment of Business 
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                            Block 1 
                           Introduction to the Economic Environment  
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                     
                    C5, Economic Environment of Business,Block 1                                     page 1 of 17   
                   
                   
                   
                   
                   
                   
                  Course author                       Farrokh Zandi, PhD 
                                                      Professor, Schulich School of Business 
                                                      York University 
                   Toronto, Canada 
                   
                  Course designer                     Catherine Kerr, BEd 
                                                      Principal, Bookthought Content Company 
                   Vancouver, Canada 
                   
                   
                   
                   
                   
                   
                   
                   
                  Copyright  Commonwealth of Learning, 2002 
                  All rights reserved. No part of this course may be reproduced in any form by any means 
                  without prior permission in writing from: 
                   
                  The Commonwealth of Learning 
                  1285 West Broadway 
                  Suite 600 
                  Vancouver, BC V6H 3X8 
                  CANADA 
                  e-mail: info@col.org 
                  C5, Economic Environment of Business,Block 1                                page 2 of 17   
                                                             Contents 
                    1    A Tour of Block One: Objectives and Introduction ............................................... 4 
                       1.1     Introduction: the Nature and Value of Economics ............................................. 4 
                       1.2 Practice................................................................................................................ 5 
                    2    Costs ............................................................................................................................ 5 
                       2.1 Practice................................................................................................................ 6 
                    3    Economic Environment of Business......................................................................... 6 
                         Macroeconomics.......................................................................................................... 7 
                         Microeconomics........................................................................................................... 7 
                       3.1 Practice................................................................................................................ 7 
                    4    Making Economic Choices in Business.................................................................... 8 
                       4.1 PEST Analysis.................................................................................................... 8 
                         4.1.1    Political/legal/institutional factors................................................................. 8 
                         4.1.2    Economic factors ............................................................................................ 9 
                         4.1.3    Social and cultural factors.............................................................................. 9 
                         4.1.4    Technological factors...................................................................................... 9 
                    5    Government Intervention in Business...................................................................... 9 
                         5.1   Three Dominant Macroeconomic Principles.................................................... 10 
                    6    Types of Economic Evaluation................................................................................ 10 
                         6.0.1    Accepted Government Objectives................................................................. 11 
                       6.1 Practice.............................................................................................................. 11 
                    7    Economic Debate...................................................................................................... 11 
                    8    Summary and Review.............................................................................................. 12 
                    9    Self-Test Questions................................................................................................... 13 
                    10      Review Problems................................................................................................. 14 
                    11      Answer Key to Review Problems....................................................................... 16 
                    12      Suggested Course Readings and Further References...................................... 16 
                    C5, Economic Environment of Business,Block 1                                        page 3 of 17