Identify the component which is a part of economic environment of business.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Demand and supply.
Demand and supply is a part of economic environment of business. All others are related to the political 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. Similarly, a rise in the disposable income of people due to increase in the gross domestic product of a country creates increasing demand for products.