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How Are Businesses Affected By The Economy?

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Stuti Ahuja answered
The economy of the country that you live in has a major impact on your business. The fluctuations in the economy and/or even exchange rates affect the business. Inflation has the biggest impact on businesses.

Inflation refers to a rise in price of goods and services. The cost of production of a company will increase as the cost of goods and services will increase as raw materials and other resources become expensive. An increase in foreign exchange rate will affect businesses which deal with import and export. Excise duty rates increase which means a lot of cost bearing for these businesses. The demand and supply scale is ever changing in an economy which directly affects the businesses. The businesses of individuals and organisations are directly connected to the economy, as the economy of a country has to do with human activity and production.

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