Significance of Economic Environment
Answers
Answer:
Several external factors have a significant influence on a country's economy. These factors play a huge role in deciding consumer behaviour and financial flow of a country, thereby affecting its economic activities. All these elements together constitute the economic environment definition.
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Answer:
Explanation:
The economic environment consists of external factors in a business market and the broader economy that can influence a business. You can divide the economic environment into the microeconomic environment, which affects business decision making - such as individual actions of firms and consumers - and the macroeconomic environment, which affects an entire economy and all of its participants. Many economic factors act as external constraints on your business, which means that you have little, if any, control over them. Let's take a look at both of these broad factors in more detail.
Macroeconomic influences are broad economic factors that either directly or indirectly affect the entire economy and all of its participants, including your business. These factors include such things as:
Interest rates
Taxes
Inflation
Currency exchange rates
Consumer discretionary income
Savings rates
Consumer confidence levels
Unemployment rate
Recession
Depression
Microeconomic factors influence how your business will make decisions. Unlike macroeconomic factors, these factors are far less broad in scope and do not necessarily affect the entire economy as a whole. Microeconomic factors influencing a business include:
Market size
Demand
Supply
Competitors
Suppliers
Distribution chain, such as retail stores