Question

What is the political and economic climate and how do they affect the market? Discuss in 100–120 words(Please type up your answer)

Answer 1

Political climate refers to the sum of all poltical factors which makes massive impact on the functioning of the market in the country. In other words we can say that poltical climate includes factors related to government rules & regulations which are very vital for the functioning of market.

Poltical climate includes followings factors;

1. Poltical stability and instability

2. Trade regulations & rules

3. Market regulations & rules

4. Regime types

5. Policy management

6. Level of curruption etc.

So we know that all above mentioned factors of poltical climate make massive impact on the market because whenever these factors are negative then functioning of the market will be negatively affected otherwise it will boost it positively.

Now let’s see economic climate;

Economic climate consisted of various economic regulations & policies which makes massive impact on the functioning of the market in the country. In other words we can say that sum of all economic policies and regulations which are relevant for the functioning of the market are known as economic climate for the market.

Economic climate consisted of followings factors;

1. General price level in the country

2. Change in disposable income

3. Level of economic cycle in the country

4. Interest rates

5. Level of economic development & growth

6. Inflation rate

7. Exchange rates

8. Economic policies of the government etc.

Thus, it is clear that whenever above mentioned economic factors are positive then economic climate will positively boost the functioning of the market or vice versa.