Question

High inflation rates generally result in constraints on business enterprises as they increase the various costs of business such as the purchase of raw materials and payment of wages and salaries to employees, etc. The dimension of business environment referred to above is:

• A. Political Environment
• B. Technological Environment
• C. Social Environment 3
• D. Economic Environment

Answer 1

The Correct Option is D

The dimension of the business environment referred to in the context of high inflation rates impacting business costs is the Economic Environment.

Explanation:

1. Economic Environment: This refers to all the external economic factors that influence buying habits of consumers and businesses and thereby affect the performance of a business. These include inflation rates, interest rates, economic growth patterns, and general economic conditions.
2. In the given scenario, high inflation increases costs associated with purchasing raw materials and paying wages, indicating an impact stemming from the Economic Environment. Such changes in economic conditions directly affect the operational costs for businesses, hence categorizing it under this dimension.

Therefore, the correct answer is: Economic Environment