Economic factors are the fundamental data about the market and economy taken

into consideration when an investment or business value is calculated.

Economic Factors Affecting Business

 Interest Rate - is the percentage of principal charged by the lender for the use
of its money. The principal is the amount of money lent.
 Exchange Rate - Exchange rate comes into the picture in case of export and
import. It affects international payment and price of goods and that affects the
economy.
 Tax Rate - tax rate is the percentage at which an individual or corporation is
taxed.
 Inflation - is a quantitative measure of the rate at which the average price level
of a basket of selected goods and services in an economy increases over a
period of time.
 Labor - The aggregate of all human physical and mental effort used in creation
of goods and services.
Labor is a primary factor of production.
 Demand / Supply - affects the economy as with the increase in demand price of
goods or service increase which result in inflation and with inflation money
supply in economy increases and with increases in the supply of goods or
services price of same decreases. Demand and supply are depended on each
other.
 Wages - compensation paid to employees for work for a company during a
period of time. Wages are always paid based on a certain amount of time. This
is usually an hourly basis. This is where the term hourly worker comes from.
Other forms of compensation include salary and commissions.
 Law and Policies - With change or modification in law economy of country
changes, for example, its government make a law that liquor should be ban in
the country it will affect companies dealing with it, their employees and
shopkeepers which at broad level affect the economy. Similarly, any policy made
by the government will affect the economy.
 Government Activity - also affects the economy. 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.
 Recession - refers to a significant decline in general economic activity in a
region, country, or the entire world that goes on for more than a few months. It is
visible in industrial production, employment, real income, and wholesale-retail
trade.
Economic Factors Affecting Development
 Education and Training - Education is the most important tool in the
development of the country. Education helps one to grow and develop which will
result in the development of the economy. And skill training helps one to develop
self which results in high wages and development of the economy.
 Natural Resources - available like a tree, water, soil, oil, coal, metal etc. affect
the growth of the country as if resources are available in country one will not to
pay for its export and existing resources will help in job creation and increase in
wealth of country which will increase overall economy.
 Power and Energy Resources - The main resources required for the
functioning of industry, company and country. Resources can be man-made like
biogas and natural resources like petrol, coal, gas etc. These powers are
required for the development of the country and hence will affect the economy
and develop it.
 Transportation - is having a crucial role in economic development as for
circulation of one good or service good means of transportation is required. 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 economic development
of the country.
 Communication - helps in the expansion of the company and helps in the
growth of the company. These days companies are using modes of
communications like mobile, internet etc. to promote their goods and services
which lead to an increase in sales and as a resulting economy develop.