UGC NET Commerce Paper 2 — Unit 1 Quiz

Business Environment & Economic Environment • 30 Questions • No Negative Marking

Select one answer for each question and click Submit.

1. Business environment is best described as:

A. Internal factors only B. All external forces influencing business C. Government rules only D. Market demand only

2. Which of the following is an element of the economic environment?

A. Inflation B. Company logo C. Office layout D. Employee dress code

3. In a mixed economy, resources are allocated by:

A. Only government B. Only private firms C. Both market forces and government D. Only foreign companies

4. Which economic system is characterized by private ownership and market forces?

A. Capitalism B. Socialism C. Command economy D. Barter economy

5. A centrally planned economy primarily relies on:

A. Price mechanism alone B. Government planning C. Consumer sovereignty alone D. Foreign trade

6. Monetary policy is primarily concerned with:

A. Government taxation B. Money supply and interest rates C. Company recruitment D. Export documentation

7. The central bank generally uses which instrument to influence liquidity?

A. Open market operations B. Advertising C. Depreciation D. Recruitment

8. An increase in the repo rate generally tends to:

A. Make borrowing cheaper B. Increase liquidity immediately C. Make borrowing costlier D. Eliminate inflation automatically

9. Fiscal policy mainly relates to:

A. Money supply and bank reserves B. Government revenue and expenditure C. Corporate accounting standards D. Stock exchange listing

10. Which is a fiscal policy instrument?

A. Government expenditure B. Repo rate C. CRR D. Bank rate

11. A reduction in taxes is generally an example of:

A. Contractionary fiscal policy B. Expansionary fiscal policy C. Contractionary monetary policy D. Trade restriction

12. During high inflation, a government may adopt:

A. Expansionary demand stimulus only B. Measures that reduce aggregate demand C. Permanent tax elimination D. Unlimited public expenditure

13. Which policy is implemented by the central bank in India?

A. Monetary policy B. Industrial licensing policy C. Company dividend policy D. Wage policy

14. Which is an example of the social environment of business?

A. Population demographics B. Repo rate C. Corporate tax rate D. Exchange rate

15. Technological environment includes changes in:

A. Production technology and digital systems B. Tax rates only C. Population size only D. Political parties only

16. Political environment includes:

A. Government stability and political institutions B. Consumer tastes only C. Production machinery only D. Interest calculations only

17. Legal environment refers to:

A. Laws and regulations affecting business B. Weather conditions C. Consumer hobbies D. Production capacity only

18. An increase in disposable income can affect business mainly by changing:

A. Consumer purchasing power B. Corporate ownership laws C. Central bank reserves D. Political boundaries

19. Globalization generally means:

A. Isolation of national economies B. Increasing integration of economies C. Ending international trade D. Eliminating competition

20. Which factor is part of the international business environment?

A. Exchange rates B. Office furniture C. Employee attendance D. Internal filing system

21. A favorable business environment can help firms by:

A. Creating opportunities for growth B. Eliminating all risks C. Guaranteeing profits D. Removing all competitors

22. Which of the following is an internal environmental factor?

A. Organizational culture B. Inflation C. Government policy D. Exchange rate

23. Business environment is dynamic because:

A. Business conditions continuously change B. Business laws never change C. Consumer preferences remain fixed D. Technology remains constant

24. Which economic objective is commonly associated with fiscal policy?

A. Economic stability B. Employee selection C. Product packaging D. Brand naming

25. When the central bank buys government securities in the open market, it generally:

A. Injects liquidity into the banking system B. Reduces money supply immediately C. Raises corporate tax D. Stops exports

26. CRR refers to the portion of deposits banks must maintain with:

A. The central bank B. The stock exchange C. Insurance companies D. Export councils

27. An increase in CRR generally tends to:

A. Reduce lendable funds of banks B. Increase lendable funds C. Reduce government spending D. Increase exports automatically

28. Which of the following is a macroeconomic factor?

A. Inflation rate B. Office seating plan C. Employee motivation D. Product color

29. A rise in interest rates generally discourages:

A. Borrowing and investment B. Saving C. Loan repayment D. Interest income

30. The main purpose of studying business environment is to:

A. Identify opportunities and threats B. Guarantee business success C. Avoid all competition D. Remove uncertainty completely