It so happens that after continuous and successive consumption of units of the same goods, the satisfaction that is experienced by a consumer starts decreasing. %PDF-1.3 The following are economic factors affecting development. Factors like demand and supply, interest rates, recession, inflation, etc. With an increase in investment cash flow in country decrease and result in a decrease in liquidity of country whereas with a decrease in investment cash flow in country increase and result in an increase in the liquidity of country. We've created informative articles that you can come back to again and again when you have questions or want to learn more! The demand and supply are two principal factors that affect the working of any business model. This category only includes cookies that ensures basic functionalities and security features of the website. This was an example of an export business. Other important aspects of the economy that affects a business operation, are the employment density and rate of income. Economic development is developed to raise the average standard of living in the country. So, the interest rate affects the economy. factors develops. Demand and supply are depended on each other. If a country is having good means of transportation it will able to increase the reach of goods or services to consumers and this will result in the economic development of the country. Recession affects the purchasing power of consumer which force companies to drop the price of their goods or services. This will also have a negative impact on the demand for these products. But if the interest rate on loan increase cash flow in country decrease and res… Sign up to receive the latest and greatest articles from our site automatically each week (give or take)...right to your inbox. %�쏢 Get in touch with us and we'll talk... For instance, in the year 2000, weather played havoc with the sugar crops of Brazil, which is the largest sugar producer in the world. Team 2 SolarCity Valuation Term Project Presentation 5-9-15 rev1, Drug addiction, a social problem of pakistan, Western educationist “JEAN-JACQUES ROUSSEAU”, No public clipboards found for this slide, ECONOMICAL FACTORS AFFECTING EDUCATIONAL PLANNING. The higher the interest rates, businesses find it difficult to commit to projects that require investment. Diminishing utility is among the external factors affecting business. These days companies are using modes of communications like mobile, internet, etc. partial economic factors influencing it. On the contrary, as the employment density and income rate go down during recession period, the purchasing power of the people also diminishes. This has been a guide to what are Economic Factors. See our Privacy Policy and User Agreement for details. Hence, companies need to have a foolproof strategy and contingency revenue reserves to cope with such dynamic changes. Education is the most important tool in the development of the country. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It also set into motion a chain of events that resulted into a global recession within a year. Government activity also affects the economy. Now customize the name of a clipboard to store your clips. Some organizations prepare for the launch of another brand, before the fall in utility and sales is experienced. The tax rate affects the price of goods and its sales which affects the economy. Owing to these economic elements, the sales, production, and procurement of a business get adversely impacted. During recession, companies face a decrease in sales revenues and profits. Resources can be man-made like biogas and natural resources like petrol, coal, gas, etc. These factors can also include any information that has an effect on the current or future value what is being examined. Social and economic variables, known as socioeconomic factors, intersect and influence quality of life. Index This affects the demand for the goods. Sociologists have found correlations between many social problems and poverty. On the contrary, lower rates make it easier for people to borrow money in order to buy cars and houses. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy, Black Friday Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects), 250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion. Low loan rates also provide an opportunity to people to spend more on other things, thus creating a demand for various goods and services, and thereby spurring the growth of economy. Economic factors that affect business as it is some of the other ways connected to business and influence drive of business like labor and its cost is always a controversial economic factor that affects the economy. However, if it is weak, the company will have to shell out more money. ECONOMICAL FACTORS AFFECTING EDUCATIONAL PLANNING BY QURAT-UL-AIN NAEEM, UOK. Necessary cookies are absolutely essential for the website to function properly. Banking facilitates monetary and fiscal policies that affect business and also the customers of the business. With the development of science and technology consumers depended too much on technology. The four supply factors are natural resources, capital goods, human The rate of interest has a direct impact on the loans that business take to sustain or propel their growth. If the government is promoting any industry like insurance or medical or technology it will promote that sector that boosts its economy which will overall support the economy. vii. Weaknesses in the Economical Factor Influence 9 Communication helps in the expansion of the company and helps in the growth of the company. Our site includes quite a bit of content, so if you're having an issue finding what you're looking for, go on ahead and use that search feature there! The per capita income and density of employment determines the rate of demand, density of demand, and also the purchasing power of the people. This will cause the imported goods from UK to become cheaper for the consumers in the US. C. Fundamental economic factors affecting For instance, one interviewee suggested that a factor creating information poverty was the large percentage of the population who cannot afford computer and broadband access, or mobile phones with Internet access (LNI7). We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Educational Planning 1 iv. But if the interest rate on loan increase cash flow in country decrease and result in a decrease in liquidity of country whereas with the decrease in interest rate over loan cash flow in country increase and result in the increase in the liquidity of country. You may learn more about our articles below on accounting –, Copyright © 2020. Factors like falling stocks, lack of dividends, below par quality, employee lay-offs, bankruptcy, etc.

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