An element of economic environment is :

The correct answer is Option (4) → Rates of saving and investment

• Option (1) Composition of family — Incorrect. The make-up of families is part of the social environment, which covers customs, traditions, values and trends in society.

• Option (2) Consumption habits — Incorrect. How people live and spend is also a social force. It grows out of their customs and way of life.

• Option (3) Life expectancy — Incorrect. How long people live is a population trend, part of the social environment.

• Option (4) Rates of saving and investment — Correct. The economic environment is made up of the economic forces that affect a business, such as interest rates, inflation and incomes. How much people save and invest decides how much money is available to business, so it is one of the components of the economic environment.