Unit 3 Business studies: Business Environment, HS 2nd year Commerce

 

General Understanding of Business Environment

1. What does the term "business environment" primarily refer to?
   a) Internal resources of a business
   b) Sum total of all external forces affecting a business
   c) Financial status of a company
   d) Organizational hierarchy
   Answer: b

2. Which of the following is not a feature of the business environment?
   a) Relativity
   b) Static nature
   c) Inter-relatedness
   d) Uncertainty
   Answer: b

3. Which is a specific force in the business environment?
   a) Government policies
   b) Technological advancements
   c) Competitors
   d) Social trends
   Answer: c

4. Which dimension of business environment includes interest rates and inflation rates?
   a) Political
   b) Social
   c) Economic
   d) Technological
   Answer: c

5. What is an example of the dynamic nature of the business environment?
   a) Constant demand for one product
   b) Entry of new competitors
   c) Legal stability
   d) Absence of technological innovation
   Answer: b

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Importance of Business Environment

6. How does understanding the business environment help firms?
   a) Reduces taxes
   b) Identifies opportunities and threats
   c) Controls external factors
   d) Ensures monopoly
   Answer: b

7. "First mover advantage" is linked to which benefit of understanding the business environment?
   a) Coping with rapid changes
   b) Identifying opportunities early
   c) Formulating policies
   d) Improving performance
   Answer: b

8. Which element is a "threat" in a business environment?
   a) Rise in demand
   b) Competitor entering with a new product
   c) Decline in production costs
   d) Improved market reputation
   Answer: b

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Dimensions of Business Environment

9. Which dimension involves changes in consumer tastes and preferences?
   a) Economic
   b) Social
   c) Political
   d) Legal
   Answer: b

10. Government restrictions on advertising alcoholic beverages are part of which environment?
    a) Social
    b) Political
    c) Technological
    d) Legal
    Answer: d

11. What is an example of technological forces in a business environment?
    a) Interest rates
    b) Social media platforms
    c) Consumer protection laws
    d) Cultural traditions
    Answer: b

12. Which dimension of the business environment ensures peace and stability for long-term business projects?
    a) Economic
    b) Political
    c) Legal
    d) Social
    Answer: b

13. An increase in life expectancy is part of which business environment dimension?
    a) Technological
    b) Political
    c) Social
    d) Economic
    Answer: c

14. Which element of the political environment can directly impact foreign trade?
    a) Regional traditions
    b) Foreign relations of a country
    c) Advancements in technology
    d) Consumer buying trends
    Answer: b

15. The Consumer Protection Act is an example of which environment?
    a) Legal
    b) Social
    c) Technological
    d) Political
    Answer: a

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Economic Environment in India

16. Which of the following is a component of the economic environment?
    a) Disposable income of individuals
    b) Social values
    c) Trade union policies
    d) Cultural beliefs
    Answer: a

17. What characterized the Indian economy at the time of independence?
    a) High industrial growth
    b) Dominance of agriculture
    c) Strong health infrastructure
    d) Low rural population
    Answer: b

18. What was one objective of India’s development plans post-independence?
    a) Increasing inequalities of income
    b) Promoting heavy industries
    c) Prioritizing imports over exports
    d) Reducing public sector roles
    Answer: b

19. The Industrial Policy of 1991 was introduced to:
    a) Strengthen licensing requirements
    b) Deregulate industries
    c) Halt foreign investments
    d) Promote government control
    Answer: b

20. What led to economic reforms in India in 1991?
    a) Surplus foreign exchange reserves
    b) High fiscal deficit and foreign exchange crisis
    c) Declining technology innovation
    d) Economic growth above 10%
    Answer: b

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Liberalisation, Privatisation, and Globalisation

21. What does liberalisation in economic reforms primarily mean?
    a) Increased government control
    b) Removal of restrictions and controls
    c) Abolishing the free market
    d) Limiting foreign trade
    Answer: b

22. Privatisation refers to:
    a) Government taking control of industries
    b) Public sector's role reduction in favor of private sector
    c) Increasing government stake in private firms
    d) State-led industrial development
    Answer: b

23. What is a key feature of globalisation?
    a) Restricting foreign trade
    b) Free flow of goods and services across borders
    c) Eliminating private enterprises
    d) Limiting foreign investments
    Answer: b

24. Which reform involved disinvestment in public sector enterprises?
    a) Liberalisation
    b) Privatisation
    c) Globalisation
    d) Demonetisation
    Answer: b

25. Globalisation aims to:
    a) Promote isolationism
    b) Encourage interdependence among nations
    c) Halt the movement of labor across borders
    d) Focus solely on domestic markets
    Answer: b

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Demonetisation

26. What was one primary aim of demonetisation in India in 2016?
    a) Reduce digital transactions
    b) Curb black money and corruption
    c) Increase the use of high-value notes
    d) Promote cash-based economy
    Answer: b

27. A feature of demonetisation was to:
    a) Eliminate taxes
    b) Transition to a cash-lite economy
    c) Promote counterfeit notes
    d) Ban digital payments
    Answer: b

28. What was the impact of demonetisation on private wealth?
    a) It increased real estate prices
    b) Declined due to fall in property values
    c) Remained unaffected
    d) Increased tax evasion
    Answer: b

29. Which sector saw a significant rise due to demonetisation?
    a) Real estate
    b) Digital payments
    c) Traditional retail
    d) Counterfeit note production
    Answer: b

30. Which is not an impact of demonetisation?
    a) Decline in cash transactions
    b) Increase in black money
    c) Rise in financial savings
    d) Growth in digital transactions
    Answer: b

Impact of Government Policies on Business and Industry

31. Which of the following is not a major policy introduced in the 1991 economic reforms?
    a) Liberalisation
    b) Privatisation
    c) Nationalisation
    d) Globalisation
    Answer: c

32. What was the main purpose of introducing the New Industrial Policy in 1991?
    a) Increase public sector control
    b) Encourage foreign private participation
    c) Eliminate private sector operations
    d) Limit export activities
    Answer: b

33. Which of the following was a feature of privatisation under the New Industrial Policy?
    a) Establishment of more public enterprises
    b) Focus on loss-making government enterprises
    c) Increased disinvestment in public sector enterprises
    d) Abolition of industrial licensing
    Answer: c

34. The Foreign Investment Promotion Board (FIPB) was set up to:
    a) Restrict foreign investments
    b) Promote foreign investment proposals
    c) Oversee domestic industries
    d) Regulate state-owned enterprises
    Answer: b

35. Which policy change helped attract foreign capital and technology?
    a) Demonetisation
    b) Privatisation
    c) Liberalisation
    d) Fiscal reforms
    Answer: c

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Features and Impacts of Business Environment

36. The interdependence of various factors in the business environment demonstrates its:
    a) Complexity
    b) Simplicity
    c) Static nature
    d) Isolation
    Answer: a

37. Why is business environment considered dynamic?
    a) It remains constant over time
    b) It changes frequently due to external forces
    c) It is determined by a single factor
    d) It is unaffected by technological progress
    Answer: b

38. Relativity in the business environment means:
    a) The environment is static
    b) It differs by country and region
    c) It is controlled by one entity
    d) It is not relevant to decision-making
    Answer: b

39. A significant feature of the economic environment is:
    a) Consumer buying preferences
    b) Interest rates and inflation rates
    c) Social expectations
    d) Political stability
    Answer: b

40. Which business environment dimension is directly related to laws and regulations?
    a) Legal
    b) Social
    c) Political
    d) Technological
    Answer: a

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Liberalisation, Privatisation, and Globalisation (Continued)

41. Liberalisation in the 1991 reforms abolished:
    a) Industrial licensing for most industries
    b) Foreign investments in India
    c) Domestic competition
    d) Privatization of public enterprises
    Answer: a

42. Under privatisation, the government retained control over:
    a) All industries
    b) Only four industries of strategic importance
    c) All manufacturing sectors
    d) None of the industries
    Answer: b

43. Which reform aimed to integrate India’s economy with the global economy?
    a) Demonetisation
    b) Liberalisation
    c) Privatisation
    d) Globalisation
    Answer: d

44. Globalisation promotes:
    a) Isolation of economies
    b) Free flow of goods and services
    c) Limiting foreign trade partnerships
    d) National self-reliance
    Answer: b

45. The term "disinvestment" in privatisation means:
    a) Sale of public sector enterprises to private entities
    b) Withdrawal of foreign investments
    c) Restricting private sector participation
    d) Strengthening state control over industries
    Answer: a

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Technological and Social Environment

46. Which is an example of a technological advancement influencing business?
    a) Flexible manufacturing systems
    b) Change in social values
    c) Government trade policies
    d) Inflation rates
    Answer: a

47. The increased demand for organic food is an example of:
    a) Technological environment
    b) Social environment
    c) Economic environment
    d) Political environment
    Answer: b

48. Digitisation of payments in India post-demonetisation highlights which environment?
    a) Technological
    b) Political
    c) Legal
    d) Economic
    Answer: a

49. What is a major element of the social environment?
    a) Inflation rates
    b) Customs and traditions
    c) Government regulations
    d) Interest rates
    Answer: b

50. A decrease in mortality rates and an increase in life expectancy are indicators of:
    a) Political environment
    b) Technological environment
    c) Social environment
    d) Legal environment
    Answer: c

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Economic Environment (Continued)

51. What is a major indicator of the economic environment?
    a) Population growth
    b) Taxation policies
    c) Inflation rate
    d) Cultural trends
    Answer: c

52. An increase in disposable income generally leads to:
    a) A decline in consumer demand
    b) Higher demand for goods and services
    c) A decrease in inflation rates
    d) Reduced foreign investment
    Answer: b

53. Which of the following was a characteristic of the Indian economy before 1991 reforms?
    a) High productivity in agriculture
    b) Heavy dependence on imports
    c) Low industrial output
    d) High level of privatisation
    Answer: c

54. What does a high fiscal deficit indicate?
    a) Excessive government revenue
    b) Government spending exceeds revenue
    c) Decrease in foreign exchange reserves
    d) Reduction in public sector enterprises
    Answer: b

55. Which government initiative is closely associated with balancing imports and exports?
    a) Demonetisation
    b) Economic reforms of 1991
    c) Industrial licensing
    d) Social welfare schemes
    Answer: b

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Legal and Political Environment

56. Which legislation regulates the functioning of companies in India?
    a) Consumer Protection Act, 1986
    b) Companies Act, 2013
    c) Factories Act, 1948
    d) Trade Union Act, 1926
    Answer: b

57. What does political stability in a country encourage?
    a) Increased investor confidence
    b) Decreased foreign investments
    c) Fluctuating consumer demand
    d) High inflation rates
    Answer: a

58. The prohibition of cigarette advertising falls under which environment?
    a) Social
    b) Legal
    c) Political
    d) Economic
    Answer: b

59. Which of the following is a factor in the political environment?
    a) Taxation policies
    b) Population growth
    c) Birth and death rates
    d) Social customs
    Answer: a

60. The extent of government intervention in business activities is an element of:
    a) Political environment
    b) Social environment
    c) Legal environment
    d) Technological environment
    Answer: a

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Globalisation (Continued)

61. What has facilitated globalisation in the modern era?
    a) Restrictive trade policies
    b) Advancement in technology
    c) Isolationist economic practices
    d) Decline in international trade
    Answer: b

62. Globalisation promotes:
    a) Tariff barriers
    b) Free movement of goods and capital
    c) Higher import restrictions
    d) Limited foreign collaborations
    Answer: b

63. Which of the following is an outcome of globalisation?
    a) Local industries remain unaffected
    b) Increased global interdependence
    c) Decrease in international trade
    d) Decline in technological advancements
    Answer: b

64. What is a key characteristic of a global economy?
    a) Isolation from global markets
    b) Free flow of information and technology
    c) Reduced international collaboration
    d) Restricted trade between nations
    Answer: b

65. Which Indian policy significantly boosted globalisation efforts?
    a) The New Industrial Policy, 1991
    b) The Demonetisation Policy, 2016
    c) The Consumer Protection Act
    d) The Factories Act
    Answer: a

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Demonetisation (Continued)

66. Which denominations were demonetised in India in 2016?
    a) ₹200 and ₹500 notes
    b) ₹500 and ₹1000 notes
    c) ₹100 and ₹2000 notes
    d) ₹2000 and ₹5000 notes
    Answer: b

67. What was a key feature of demonetisation?
    a) Unlimited cash withdrawals from banks
    b) Introduction of digital payment systems
    c) Reduction in government tax revenues
    d) Issuance of new ₹10 currency notes
    Answer: b

68. What was one of the aims of demonetisation?
    a) Increase cash-based transactions
    b) Transition to a less-cash economy
    c) Reduce digital adoption
    d) Promote black money
    Answer: b

69. Which segment experienced a decline due to demonetisation?
    a) Real estate
    b) Digital payments
    c) Tax collection
    d) Foreign investments
    Answer: a

70. Demonetisation contributed to:
    a) Decline in financial savings
    b) Increased transparency in monetary transactions
    c) Decreased government tax collection
    d) Loss of investor confidence
    Answer: b

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Technological and Social Environment (Continued)

71. The rise in demand for e-commerce platforms is due to changes in:
    a) Political environment
    b) Social and technological environment
    c) Legal environment
    d) Economic environment
    Answer: b

72. Technological advancements in manufacturing result in:
    a) Increased production costs
    b) Reduced operational efficiency
    c) Greater automation and efficiency
    d) Decreased consumer trust
    Answer: c

73. An increase in awareness about fitness leads to demand for:
    a) Packaged food
    b) Health supplements and gyms
    c) Heavy industrial machinery
    d) Real estate projects
    Answer: b

74. Retailers using automated stock management systems are examples of:
    a) Legal advancements
    b) Technological environment
    c) Political influence
    d) Social changes
    Answer: b

75. Online payment portals and e-wallets represent advancements in which area?
    a) Social environment
    b) Economic environment
    c) Technological environment
    d) Political environment
    Answer: c

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Impact of Business Environment on Performance

76. How does an understanding of the business environment improve performance?
    a) By eliminating competition
    b) By ensuring maximum profits
    c) By helping adapt to external changes
    d) By controlling external factors
    Answer: c

77. What enables a business to identify early warning signals?
    a) Lack of competition
    b) Ignoring external threats
    c) Awareness of environmental trends
    d) Focus solely on internal processes
    Answer: c

78. The need for frequent innovation in product design is influenced by:
    a) Legal environment
    b) Static consumer preferences
    c) Dynamic business environment
    d) Unchanging economic factors
    Answer: c

79. An enterprise's future depends on:
    a) Isolated decision-making
    b) Ignoring environmental changes
    c) Continuous environmental monitoring
    d) Avoiding consumer demands
    Answer: c

80. Market orientation involves:
    a) Ignoring customer needs
    b) Focusing on existing products
    c) Analyzing market trends and demands
    d) Limiting marketing efforts
    Answer: c

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Economic Reforms of 1991

81. Which element was reduced in the economic reforms of 1991?
    a) Role of the private sector
    b) Industrial licensing requirements
    c) Foreign direct investments
    d) Technological advancements
    Answer: b

82. What was the purpose of disinvestment during the reforms?
    a) Increase public sector stakes
    b) Strengthen government ownership
    c) Transfer public sector ownership to private entities
    d) Reduce private sector roles
    Answer: c

83. Which measure under liberalisation simplified the import process?
    a) Removal of trade restrictions
    b) Increase in tariffs
    c) Reduction in export subsidies
    d) Introduction of industrial licensing
    Answer: a

84. What was the main goal of globalisation under the New Industrial Policy?
    a) Reduce foreign trade
    b) Isolate the Indian economy
    c) Integrate the Indian economy with the global economy
    d) Restrict capital movement
    Answer: c

85. Which organization was created to channel foreign investments?
    a) Foreign Exchange Board
    b) Foreign Investment Promotion Board (FIPB)
    c) National Innovation Foundation
    d) Reserve Bank of India
    Answer: b

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Demonetisation (Continued)

86. Which sector experienced a rise in digital payments post-demonetisation?
    a) Retail
    b) Agriculture
    c) Manufacturing
    d) Real estate
    Answer: a

87. Which is a long-term benefit of demonetisation?
    a) Increased reliance on cash
    b) Expansion of black money
    c) Greater adoption of digital economy
    d) Lower tax compliance
    Answer: c

88. What percentage of money in circulation was invalidated during demonetisation?
    a) 60%
    b) 70%
    c) 86%
    d) 90%
    Answer: c

89. Demonetisation encouraged the use of:
    a) Paper-based transactions
    b) Black-market trading
    c) E-wallets and digital cash
    d) Old currency notes
    Answer: c

90. Which of the following is a challenge of digital transactions promoted post-demonetisation?
    a) High tax evasion
    b) Dependence on internet connectivity
    c) Increased counterfeit currency
    d) Limited financial inclusion
    Answer: b

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Technological Environment (Continued)

91. Which of the following is a recent technological trend affecting businesses?
    a) Manual accounting systems
    b) Cloud computing
    c) Reduced internet usage
    d) Lack of automation
    Answer: b

92. Advancements in biotechnology would fall under which environment?
    a) Economic
    b) Technological
    c) Legal
    d) Political
    Answer: b

93. Which of the following has transformed the advertisement industry?
    a) Social traditions
    b) Technological advancements
    c) Economic inflation
    d) Legal restrictions
    Answer: b

94. What has made online ticket booking possible?
    a) Economic reforms
    b) Political stability
    c) Technological innovation
    d) Legal amendments
    Answer: c

95. The emergence of artificial intelligence (AI) in business is part of:
    a) Political environment
    b) Legal environment
    c) Technological environment
    d) Social environment
    Answer: c

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Social Environment (Continued)

96. The rise in demand for eco-friendly products is influenced by:
    a) Political environment
    b) Economic environment
    c) Social awareness
    d) Legal reforms
    Answer: c

97. Increased participation of women in the workforce is an example of a shift in:
    a) Technological environment
    b) Economic environment
    c) Social environment
    d) Legal environment
    Answer: c

98. The growing popularity of health and fitness trends affects demand for:
    a) Processed food
    b) Organic food and gym services
    c) Heavy machinery
    d) Traditional retail stores
    Answer: b

99. Celebrations like Diwali and Christmas impact business by:
    a) Decreasing demand for goods
    b) Creating seasonal business opportunities
    c) Promoting political stability
    d) Eliminating competition
    Answer: b

100. Which of the following is a major factor in the social environment?
     a) Interest rates
     b) Literacy rates
     c) Currency fluctuations
     d) Tax laws
     Answer: b