Busıness Fınance Iı Deneme Sınavı Sorusu #1013253
How does the economic environment affect the business?
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Such factors include GDP of the economy, per capita income, availability of capital, utilization of resources. |
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The term economic environment refers to all the external economic factors. |
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These factors are often beyond a company's control, and may be either large-scale (macro) or small-scale (micro). |
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The economic environment consists of both macroeconomic factors involving such things as market condution, forces of demand and suppley, inflation, interest rates and taxes. |
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Each firm has specific features affecting its asset structure, risk, and competitive strength. |
The economic conditions in general impact the investment and financing decisions simultaneously. The economic policies of the country where the company is established to determine the market conditions shaping up both the forces of demand and supply. The political and economic stability affect the level of risk at the macro and micro levels. The inflation rate leads to the interest rate. Furthermore, the tax rates directly impel the level of investments and financing mechanisms. Risk escalates in an economic
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