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

Step 1: Understanding the Economic Environment. The economic environment consists of various economic factors such as inflation, interest rates, taxation, and government policies that impact businesses.

Step 2: Why the correct answer is Economic Environment?- Inflation leads to higher costs of raw materials, wages, and overall business expenses.
- It affects purchasing power, investment decisions, and profit margins.
- Since the given scenario discusses inflation’s impact, it is classified under the Economic Environment.