Supply in the economy and public debt are the examples of one of the dimensions of Business environment. Identify the dimension.

Economic Environment

The correct answer is Option (4) → Economic Environment.

Supply in the economy and public debt are the examples of economic dimensions of Business environment.

Economic environment-  Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise. Short and long term interest rates significantly affect the demand for product and services. Some components of economic environment are Existing structure of the economy in terms of relative role of private and public sectors, The rates of growth of GNP and per capita income at current and constant prices, Rates of saving and investment, Volume of imports and exports of different items, Balance of payments and changes in foreign exchange reserves, Agricultural and industrial production trends, Expansion of transportation and communication facilities, Money supply in the economy, Public debt (internal and external), Planned outlay in private and public sectors.

OTHER OPTIONS

•  Social environment-  The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Traditions define social practices that have lasted for decades or even centuries.

• Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— centre, state or local. It is imperative for the management of every enterprise to obey the law of the land. Therefore, an adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. Non-compliance of laws can land the business enterprise into legal problems.

• Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. The significance of political conditions in business success lies in the predictability of business activities under stable political conditions. On the other hand, there may be uncertainty of business activities due to political unrest and threats to law and order.