What is the Economic Environment?
Economic environment refers to all factors/ forces which have an economic impact either negative or positive on business organization.
Industrial production, agriculture, planning, basic economic philosophy, infrastructure, national income, per capita income, GNP, money supply, price level, population, rate of growth, disposable personal income, annual budgets, rate of saving, investment value of imports and exports, balance of payments, distribution of income and trade cycles are major factors which make up the total economic environment.
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There is close relationship between business organization and its economic environment. Business obtains all its needed inputs from economic environment and it absorbs the output of business units.
The economic environment consists of following components. These are:
- Economic System of Nation
- Economic Policies of Nation
- Economic Conditions.