The economic environment of a country is indicated by:
A. Agricultural trends
B. Inflation rates
C. High mortality rates due to no public health system.
D. Value of currency.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → A, B and D only
A. Agricultural trends — Correct. The components of the economic environment include agricultural and industrial production trends. How much the farms and factories produce shows the health of the economy, and it affects the demand for a firm’s products.
B. Inflation rates — Correct. Inflation is one of the economic factors. Rising prices increase a firm’s costs and reduce what people can buy.
C. High mortality rates due to no public health system. — Incorrect. Health and life expectancy belong to the social environment. High mortality at the time of Independence describes the state of the country then, not an economic indicator.
D. Value of currency. — Correct. The value of the rupee is one of the economic factors. It changes the cost of imports and the income from exports.
NCERT (2026-27 Edition): “Dimensions of Business Environment … (i) 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. …”
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