Business Environment MCQ for NET Exam with Answers

Business Environment MCQ for NET Exam with Answers is also helpful for BBA, MBA, BCOM, and MCOM regular and distance mode examinations.

1. In the modern outlook, profit maximization is a primary motive of business.
Ans: False

2. What people think of an organization’s actions is called:
a) Public image
b) Public visibility
c) Viability
d) Values
Ans: a) Public image

3. The three main elements of a society that have a direct impact on business are:
(i)___ (ii) ___and (iii) ___
Ans: (i) Family, (ii) Educational institutions, (iii) Religion

4. ___ developed the code of ethics which uses four questions for any ethical issue a business faces.
Ans: Rotary International

5. Business environment refers to the external forces operating on an organization.
Ans: False

6. The two most powerful institutions in society today are business and government.
Ans: True

7. India started moving towards Liberalism in 1988.
Ans: False ideology

8. Apolitical system is based on the ___ of the ruling government.
Ans: Sovereign, territory.

9. A State is a ___ entity, which occupies a well-defined ___.
Ans: sovereignty, political

10. In a capitalistic system, the consumer is regarded as ___.
Ans: Sovereign

11. The process through which the prices of goods and services are determined by the market forces of demand and supply in a capitalist economy is called ___.
Ans: Price mechanism

12. The ___ motive which is an integral part of the capitalist economy motivates the producers to undertake production.
Ans: Profit

13. In a capitalist economy, there is ___ interference by the government in economic activities.
Ans: Minimum/least

14. Extreme form of socialism is called ___.
Ans: Communism

15. A financial system provides a mechanism by which savings are transformed into ___.
Ans: Investments.

16. Legal environment of business refers to a ___ laid down by law.
Ans: code of conduct

17. The legal environment of a nation comprises ___ enacted by a competent authority.
Ans: laws, rules, and regulations

18. The Companies Act, of 1956 applies to universities, co-operative societies, unincorporated trading, scientific and other societies.
Ans: False

19. The Indian Contract Act, of 1872, contains provisions for breach of contract.
Ans: True

20. In reference to the Industrial Policy Resolution of 1948, the government recognized the need for a ___ economy.
Ans: Mixed

21. The extent and nature of State intervention may vary from country to country.
Ans: True

22. The government performs intermediary and activist functions in an economy.
Ans: False

23. The Government plays four major roles in an economy.
Ans: True

24. India was experiencing large and persistent ___ since the eighties.
Ans: macroeconomic imbalances

25. Fiscal and trade deficits enjoy a ___ relationship.
Ans: Dynamic

26. Government expenditure can be studied in ___ phases.
Ans: three

27. The Hindu rate of growth was ___%.
Ans: 3.5%

28. India faced an economic crisis in ___.
Ans: 1991

29. The Great Depression that affected the American economy was in the year ___
Ans: 1929

30. The process of dismantling governmental regulations and control is known as ___.
Ans: liberalization

31. The process of the sale of equity of public sector units to the private sector is ___.
Ans: divestiture

32. State true/ false: The process of integrating with the global economy means the Government has no role to play.
Ans: False

33. Name the policy that marked the beginning of economic reforms in India. ___
Ans: Industrial Policy Statement of 1991

34. State true/ false: The MRTP Act has been abolished.
Ans: True

35. Non-profitable or sick units are referred to as ___.

36. The IPR 1956 put too much importance on the public sector.
Ans: True

37. The thrust of the Industrial Policy of 1977 was on the effective promotion of Cottage and small industries.
Ans: True

38. The concept of District Industrial Centers was introduced for the first time in the Industrial Policy of 1977.
Ans: True

39. The Industrial Policy of 1977 was introduced by the Congress government.
Ans: False

40. The Industrial Policy of 1980 made changes in favour of ___ business houses.
Ans: Large

41. A more ___ intensive path of development was chosen in the Industrial Policy of 1980.
Ans: Capital

42. The Industrial Policy of 1980 was the first step towards ___.
Ans: Liberalisation

43. Which of the following statement is correct about the New Economic Policy 1991?
a) It made it compulsory for the industries to obtain a license for all projects.
b) It abolished licensing for all projects except 18 industries of strategic and security importance.
c) It gave the dominant position to the public sector.
d) None of the above.
Ans: (b)

44. At present there are only ___ industries for which licensing is compulsory.
a) 18
b) 10
c) 6
d) 9
Ans: (c)

45. Under the New Economic Policy,1991:
a) The mandatory convertibility clause is applicable to all term loans.
b) The mandatory convertibility clause is applicable to term loans of more than 10 years.
c) The mandatory convertibility clause is applicable to term loans of less than 10 years.
d) The mandatory convertibility clause is no longer applicable.
Ans: (d)

46. ___ refers to the transfer of assets from public to private ownership.
a) Globalization
b) Privatization
c) Disinvestment
d) Liberalization
Ans: (b)

47. At present only ___ industries are exclusively reserved for the public sector.
a) 5
b) 7
c) 3
d) 8
Ans: (c)

48. The government had to opt for Privatisation because the ___ sector was not efficient.
a) Private sector
b) Public sector
c) Joint sector
d) Corporate sector
Ans: (b)

49. ___ means integrating the domestic economy with the world economy.
a) Globalization
b) Privatization
c) Liberalization
d) Disinvestment
Ans: (a)

50. The salient features of the New Economic Policy 1991 are:
a) Liberalization
b) Privatization
c) Globalization
d) All of the above
Ans: (d)

51. The ___ sector was given a dominant position in the newly independent India.
Ans: Public

52. Disinvestment is one of the ___ of privatization.
Ans: ways/methods

53. ___ refers to the transfer of assets from public to private ownership.
Ans: Privatization

54. Disinvestment means privatization through the sale of ___.
Ans: Equity

55. ___ refers to the selling of a public sector unit’s equity in the market.
a) Globalization
b) Liberalization
c) Privatization
d) Disinvestment
Ans: d) Disinvestment

56. Which of the following statements regarding Privatization is correct?
a) Privatization is the solution to all problems.
b) Privatization leads to attaining social and economic efficiency.
c) Privatization leads to sacrificing future streams of income.
d) None of these.
Ans: c) Privatization leads to sacrificing future streams of income.

57. The disinvestment of BALCO took place in February 2001, and Sterlite Industries became the single largest private stakeholder in the process.
Ans: True

58. Privatization increases the interference of government and political parties in business.
Ans: False

59. The government policy in India on privatization has evolved from selling minority shares in 1991-92 to an emphasis on strategic sales during the late 1990s.
Ans: True

60. Privatization leads to increased efficiency and greater profitability.
Ans: True

61. Globalization is a process of development of the world into a ___ integrated economic unit.
Ans: Single

62. Globalization is the term used to describe the process of removal of restrictions on ___ and ___.
Ans: Foreign trade and investment

63. Along with globalization, foreign companies have entered developing countries.
Ans: True

64. Globalization is the outcome of free trade and the lowering of tariffs.
Ans: True

65. Globalization involves no risk.
Ans: False

66. When competition levels become higher, there is an apprehension that inefficient units may close down.
Ans: True

67. WTO stands for.
a) World Trade Organisation.
b) World Transport Organisation.
c) World Tariff Organisation.
d) Women Teachers Organisation.
Ans: (i)

68. ___means integrating the domestic economy with the world economy.
a) Privatization.
b) Liberalization.
c) Globalization.
d) Disinvestment.
Ans: (iii)

69. Globalization has brought to the Indian Economy,
a) More Foreign Direct Investment
b) More growth in the GDP.
c) Progress in communication, transportation, and information technology.
d) All of the above.
Ans: (iv)

70. Match the following

A. WTO  I. Provides loans to address the short-term balance of payment problems
B. RBI II. Multilateral trade negotiating body
C. IMF III. Facilitating lending and borrowing for reconstruction and development
D. IBRD IV. Central Bank of India

Ans: A- II , B- IV, C- I , D- III

71. According to IPR, 1948, the government reserved ___ only for arms and ammunition, atomic energy, and railways.
Ans: Monopolies

72. The IPR, 1956 laid down three categories, of which Schedule A included industries exclusively as State responsibility.
Ans: True

73. The IPR, 1956 emphasized the role of large-scale industries in the development of the economy and in providing employment.
Ans: False

74. Godrej industries look at CSR as ___.
Ans: philanthropy

75. The motto of P&G‟s social project is ___.
Ans: business with a purpose

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MCQ on Business Environment with Answers Set-1

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