RELATIONSHIP OF ECONOMIC SYSTEM WITH BUSINESS WORLD

Broadly speaking, the relationship between the economy and the business that affect each other. In a country, the economic system belongs to macroeconomics. In contrast, business belongs to microeconomics.

Between macro and micro, of course has a bond that is close enough and affect each other. If a country has a good economic foundation, where its currency value is stable, economic growth is always positive, its government policy supports the investment climate, and its social and political conditions are conducive, it provides a ‘fresh air’ for businesses to thrive. As business grows, investment will come in, labor is increasingly absorbed and state revenues will increase through taxes. This is a sign that a good business will strengthen a country’s economy.

The higher the economic growth of a country, the income of the community will increase. With the increase of people’s income, their purchasing power will increase as well. With increasing purchasing power, the business sector will get fresh air, with increasing business opportunities, increased sales, and of course corporate profits. Conversely, if GDP / GNP is low, then the economy becomes sluggish and people’s purchasing power will decrease. This will affect the business world will be increasingly lethargic.

The effect of the business world on the unemployment rate Business is one solution to reduce the unemployment rate of a country. The more business is run, the more open employment. To avoid high unemployment rates the business must be able to adjust the issues related to people’s purchasing power and business efficiency, as unemployment harms society, especially business. So, the existence of business is increasingly ‘mushrooming’, at least can ‘help’ the government in reducing the high unemployment rate.

Inflation impact on business ecosystem

– Inflation is a general trend of rising product prices.

– Product prices and changes are described as consumer price indices.

– The faster the price increases, the higher the consumer price index.

– The higher the consumer price index, the higher the rate of inflation.

– The higher the inflation rate, the purchasing power of the people will decrease further.

Thus, high inflation rates have a negative impact on the business world, because of the declining purchasing power of society – will make the business world increasingly listless.