Business Environment MCQs 2025
Multiple Choice Questions and Answers MCQs 2025
For BCOM, MCOM, CMA, CS and CA exam
Introduction to Business
Environment
Business is an activity
undertaken for the purpose of producing or selling a particular commodity or
service and earns a profit. The business has several dimensions such as
purchasing the inputs, converting the inputs into the output, selling that
output at a profitable price.
Every dimension of a business
depends upon several factors. Hence a business is influenced by several
factors, all them put together are described as Business Environment. A
business can grow and prosper in a particular environment just as a plant can
grow in a particular soil, climate, water supply etc.
Hence the entrepreneur has to pay
attention to the environment in which he has to conduct his business
activities. If he is able to adapt his business to the environment effectively
and efficiently the business can make higher profits. This makes the study of
business environment important.
According to Keith Davis,
“Business environment is the aggregate of all conditions, events and influences
that surrounds and affects the business.”
According to wheeler, “Business environment is the total of all things external to business firms and industries which affect their organisation and operations.”
Part A: Multiple Choice Questions (35)
Q.1. Which
of the following is a component of Indian business environment?
a)
Political Environment
b) Physical
Environment
c) Legal
Environment
d) All of
the above
Answer: d)
All of the above
Q.2. Which
of the following is an internal factor of business environment?
a)
Company’s image
b) Quality
of human resources
c) Mission
and objectives
d) All of
the above
Answer: d)
All of the above
Q.3. Which
one of the following is a natural element of business environment?
a)
Political stability
b) Weather
and climatic condition
c) Market
forces
d)
Globalization
Answer: b)
Weather and climatic condition
Q.4. Which
one of the following is an advantage of privatization?
a) Natural
monopoly
b) Improved
efficiency
c) Lack of
competition
d)
Bureaucratic delay
Answer: b)
Improved efficiency
Q.5. Which
one of the following is a drawback of privatization?
a) Natural
monopoly
b)
Increased efficiency
c) Better
governance
d)
Employment growth
Answer: a)
Natural monopoly
Q.6. In
which year was the World Trade Organization (WTO) set up?
a) 1985
b) 1991
c) 1995
d) 2000
Answer: c)
1995
Q.7. The
Dunkel Draft was proposed in the year –
a) 1986
b) 1991
c) 1995
d) 1998
Answer: b)
1991
Q.8. The
International Monetary Fund (IMF) was established in –
a) 1944
b) 1945
c) 1950
d) 1960
Answer: b)
1945
Q.9. The
World Bank was established in –
a) 1944
b) 1945
c) 1950
d) 1965
Answer: b)
1945
Q.10. SEBI
was set up in the year –
a) 1985
b) 1990
c) 1992
d) 1995
Answer: c)
1992
Q.11. The
full form of MFN is –
a) Most
Favoured Nation
b) Major
Financial Network
c) Monetary
Federal Norms
d) Minimum
Fiscal Norm
Answer: a)
Most Favoured Nation
Q.12. The
full form of SEZ is –
a) Special
Economic Zone
b) Specific
Export Zone
c) State
Economic Zone
D) None of
the above
Answer: a)
Special Economic Zone
Q.13. The
full form of SAFTA is –
a) South
Asian Free Trade Area
b) South
Asia Financial Trade Agreement
c) State
and Foreign Trade Association
d) None of
the above
Answer: a)
South Asian Free Trade Area
Q.14. The
full form of MRTP is –
a) Monetary
and Reserve Trade Practices
b)
Monopolistic and Restrictive Trade Practices
c) Market
Regulatory Trade Policy
d)
Management of Reserve Trade Provisions
Answer: b)
Monopolistic and Restrictive Trade Practices
Q.15. The
full form of GATT is –
a) General
Agreement on Trade and Tariffs
b) General
Agreement on Tariffs and Trade
c) Global
Agreement for Trade and Tariffs
d)
Generalized Agreement on Trade and Terms
Answer: b)
General Agreement on Tariffs and Trade
Q.16. The
full form of NITI in NITI Aayog is –
a) National
Institute of Transforming India
b) National
Institute of Training in India
c) National
Initiative for Trade and Industry
d) None of
the above
Answer: a)
National Institute of Transforming India
Q.17. Which
of the following is a function of Capital Market?
a) Raising
long-term funds
b) Raising
short-term funds
c)
Controlling inflation
d)
Monitoring SEZ
Answer: a)
Raising long-term funds
Q.18. Which
of the following is a function of Money Market?
a) Raising
long-term funds
b) Raising
short-term finance
c)
Investment in SEZ
d)
Regulation of foreign trade
Answer: b)
Raising short-term finance
Q.19.
Capital market deals with –
a)
Short-term funds
b)
Long-term funds
c)
Medium-term funds
d) Current
liabilities
Answer: b)
Long-term funds
Q.20. Money
market deals with –
a)
Short-term funds
b)
Long-term funds
c) Capital
funds
d) Mixed
funds
Answer: a)
Short-term funds
Q.21.
Shareholders, employees and customers are known as –
a) Owners
b)
Creditors
c)
Stakeholders
d)
Borrowers
Answer: c)
Stakeholders
Q.22. The
Consumer Protection Act was enacted in –
a) 1984
b) 1985
c) 1986
d) 1988
Answer: c)
1986
Q.23. Goods
and Services Tax (GST) was introduced in India as –
a) Genuine
Standard Tax
b) Goods
Plus Service Tax
c) Goods
and Services Tax
d) General
Structure of Tax
Answer: c)
Goods and Services Tax
Q.24.
Economic planning is a part of –
a) Economic
environment
b)
Political environment
c) Internal
environment
d)
Technological environment
Answer: a)
Economic environment
Q.25.
Outsourcing of jobs due to globalization has resulted in –
a) Job
creation in developed countries
b) Loss of
jobs in developing countries
c) Loss of
jobs in developed countries
d) None of
the above
Answer: c)
Loss of jobs in developed countries
Q.26. SDRs
are also called –
a) Paper
Gold
b) Paper
Currency
c) Reserve
Bonds
d) None of
the above
Answer: a)
Paper Gold
Q.27.
Privatization process requires –
a) More
control by government
b) No
planning
c) Changes
in legislation
d) Increase
in taxation
Answer: c)
Changes in legislation
Q.28. The
concept of Small Scale Industries was introduced by –
a)
Industrial Policy Resolution 1948
b)
Industrial Policy Resolution 1956
c)
Industrial Policy Resolution 1977
d)
Industrial Policy Resolution 1991
Answer: c)
Industrial Policy Resolution 1977
Q.29. A
company that operates in multiple countries is called –
a) Euro
Unit
b)
Multinational Corporation
c) Foreign
Unit
d)
Globalized Enterprise
Answer: b)
Multinational Corporation
Q.30. The
present status of Indian economy is an example of –
a)
Capitalist Economy
b)
Socialist Economy
c) Mixed
Economy
d) Closed
Economy
Answer: c)
Mixed Economy
Q.31.
Revenue Expenditure of the government includes –
a)
Administrative expenses
b) Infrastructure
development
c) Capital
investment
d) None of
the above
Answer: a)
Administrative expenses
Q.32. The
disinvestment policy in India was initiated by –
a) Atal
Bihari Vajpayee’s Government
b)
Narasimha Rao’s Government
c)
Chandrasekhar’s Government
d) Manmohan
Singh’s Government
Answer: c)
Chandrasekhar’s Government
Q.33. Which
of the following is NOT a feature of capitalism?
a) Freedom
of choice
b) Profit
maximization
c) No
freedom in fixing price
d) Freedom
of enterprises
Answer: c)
No freedom in fixing price
Q.34. The
unique features of business environment are –
a) Dynamic
forces
b)
Symbiotic relationships
c) Cannot
be changed by a single firm
d) All of
the above
Answer: d)
All of the above
Q.35.
Environmental scanning is done –
a) For
increasing competition
b) For
meeting growing competition
c) For
raising short-term funds
d) For
strengthening SEZ
Answer: b)
For meeting growing competition
Part B: Fill in the Blanks (20)
36. The WTO was set up in the year 1995.
37. The IMF was set up in the year 1945.
38. The World Bank was established in 1945.
39. SEBI was established in the year 1992.
40. The full form of MFN is Most Favoured Nation.
41. The full form of MRTP is Monopolistic and Restrictive Trade
Practices.
42. The full form of SAFTA is South Asian Free Trade Area.
43. The full form of SEZ is Special Economic Zone.
44. The full form of GATT is General Agreement on Tariffs and Trade.
45. SDRs are also called Paper Gold.
46. The Dunkel Draft was proposed in 1991.
47. The Consumer Protection Act was enacted in 1986.
48. The disinvestment policy was initiated by Chandrasekhar’s
Government.
49. Economic planning is a part of the economic environment.
50. Political environment includes legislature, executive, and
judiciary.
51. The present Indian economy is a Mixed Economy.
52. Environmental scanning is done to meet growing competition.
53. Privatization process requires changes in legislation.
54. Small Scale Industries were introduced under Industrial Policy
Resolution 1977.
55. Outsourcing of jobs due to globalization has caused loss of jobs
in developed countries.
Part C: True/False (20)
Q.56. Economic growth always increases welfare.
Answer: False
Q.57. Business environment and economic environment are the same.
Answer: False
Q.58. Inclusive growth benefits every section of society.
Answer: True
Q.59. Co-existence of public and private sector is a feature of Indian
business environment.
Answer: True
Q.60. Privatization always removes inefficiency.
Answer: False
Q.61. The Dunkel Draft was related to GATT.
Answer: True
Q.62. Capital market deals with long-term funds.
Answer: True
Q.63. Money market deals with short-term funds.
Answer: True
Q.64. India was one of the founder members of WTO.
Answer: True
Q.65. SEZ stands for Special Export Zone.
Answer: False
Q.66. SAFTA stands for South Asian Free Trade Area.
Answer: True
Q.67. IMF was established in 1945.
Answer: True
Q.68. WTO was established in 1991.
Answer: False
Q.69. Privatization always ensures better governance.
Answer: False
Q.70. Human resources are an internal factor of business environment.
Answer: True
Q.71. Political environment is part of external environment.
Answer: True
Q.72. Technological environment is an internal factor.
Answer: False
Q.73. Economic planning is part of political environment.
Answer: False
Q.74. The World Bank and IMF were set up in the same year.
Answer: True
Q.75. Outsourcing has always increased employment in developed
countries.
Answer: False