The Impact of Business Activities On An Economy.


The existence of business activities in an economy is very important because of the following reasons:

MICRO- ECONOMY:

1. Individual Household: Business activities play vital role in the life of an individual by serving as a means of  income generation in meeting household needs. An individual can be self employed or a salary earner in the business sector.
If businesses don't exist, there won't be owners of Small and Medium Enterprises (SMEs), the unemployment rate will be very high.



2. Government: The existence of business activities creates the opportunity for income gener paid by business owners and their employees such as Company Income Tax, Personal Income Tax, and Petroleum Profits Tax.
Also government also involve itself in business activities through nationalization, indigenization and creation of public enterprises with the purposes of welfare creation for the citizens and income generation.
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3. Business Organizations: Business activities by the organizations serve the major motive of profit maximization.
The realized profit then enables the businesses to invest more and incur any expenditure such as payments of salaries, advertising, purchases of inventory, promotions and sponsors etc.

         MACRO ECONOMY:
 

   

The existence of business activities and organizations plays a vital role in the whole economy. If there is a decrease or non existence of business activities, the economy of a nation will melt down.

Also the rate of unemployment will also be abnormal if businesses organizations don't exist whether foreign companies, private and public enterprises.

And also it's during economic recession, entrepreneurs arise. Citizens of a country affected with recession, most times, see it as an opportunity for more innovations and development.


The Gross Domestic Product (GDP), Gross National Product (GNP) and Net National Product ( NNP).





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