Economic Environment

Posted in Finance, Accounting and Economics Terms, Total Reads: 1559

Definition: Economic Environment

The economic environment is a combination of various economic factors which have their effect on the working of the business. These factors influence the buying behavior and spending patterns of consumers and institutions.

In all, the economic environment comprises of:

  • Income and wealth
  • Employment levels
  • Productivity

Again, the economic environment can be classified into:

  • Microeconomic environment
  • Macroeconomic environment

Some of the factors that impact the economic environment of a nation as well as the world are:

  • Inflation and deflation
  • Interest rates
  • Exchange rates
  • Monetary and fiscal policy

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