ECONOMIC ENVIRONMENT:

Various environmental factors such as economic environment, social culture environment,

political environment , technological, demographic and international environment affect the
business and its working out of there factors economic factor is the most important factor.
The totality of economic factors such as employment, income, Inflation, interest, rates.
Productivity and wealth, which influenced the buying behavior of consumer and institutions.

ELEMENTS OF ECONOMIC ENVIRONMENT :

1.
2.
3.
4.
5.

Economic condition
Economic system
Economic policies
International economic environment
Economic legislation

1. ECONOMIC CONDITION
Economic policies of a business unit are largely affected by the economic condition of an
economy. Any improvement in the in the economic condition such as standard of living,
purchasing power of public, demand and supply, distribution of income etc. largely
affects the size of the market.
Business cycle is another economic condition that is very important for a business unit.

Business cycle has five different stages:

Prosperity
Boom
Decline
Depression
Recovery
Following are the mainly economic condition of a country.

COMPONENT OF ECONOMIC CONDITION OF A COUNTRY:

1. Stages of business cycle.
2. National income, per capital income, distribution of income
3. Rate of capital formation.
4. Demand and supply trends.
5. Inflation rate of country.
6. Industrial growth rate, export growth rate.
7. Interest rate prevailing in the economy.
8. Trend in industrial sickness.
9. Efficiency of public and private sector.
10. Growth of primary and secondary capital market.
11. Size of market.