With inflation, the money reserve in the economy increases with the rise in the supply of goods or services. The company begins its plant or production where labor is cheap.ĭemand or supply of goods or services affects the economy as with the increase in demand price of goods or service increase, which results in inflation. As a result, many countries have started outsourcing Outsourcing Outsourcing refers to contracting out specific business processes to a third-party or specialized service provider, i.e., an individual or company. Labour and cost or wage are always the important economic factors affecting the economy. The increase in the demand price of goods or services increases inflation and money supply. The tax rate affects the price of goods and their sales, affecting the economy. The tax rate is a crucial part of the economy. Due to this, it affects international payment and the price of goods, affecting the economy. The exchange rate comes into the picture in the case of export and import. So, the interest rate affects the economy. In contrast, with the decline in interest rate over a loan, cash flow in the country increases and increases the country’s liquidity. But, if the interest rate on loans increases, cash flow in the country decreases, resulting in a decrease in the nation’s liquidity. Conversely, a decrease in investment cash flow in the country increases and increases the country’s liquidity.Ī higher return on investment will attract investors. read more in the country decreases and results in a reduction in the country’s liquidity. It proves to be a prerequisite for analyzing the business’s strength, profitability, & scope for betterment. With an increase in investment, cash flow Cash Flow Cash Flow is the amount of cash or cash equivalent generated & consumed by a Company over a given period. Interest rate is a major factor that affects the liquidity of cash in the economy. The following are the top 10 economic factors that affect the business: Top 10 Economic Factors Affecting Business Though it is not an economic factor, it is affected by economic factors and drives the business to generate maximum revenue. Management plays a vital role in the growth of the company. A higher return on investment will attract investors. Interest rate is a major factor that affects the liquidity Liquidity Liquidity is the ease of converting assets or securities into cash. Many countries have started outsourcing work from other countries. Source: Economic Factors ()Įconomic factors that affect business as it is connected to business and influence the drive of business-like labor and cost are always controversial economic factors that affect the economy. You are free to use this image on your website, templates, etc, Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked There are multiple examples of economic factors. Top 10 Economic Factors Affecting Business.
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