Q1. The ________ of the government covers all those principles, policies, rules, and procedures and controls the industrial enterprise of the economy.
a) Industrial
b) Fiscal
c) Monetary
d) Macro
Answer: ✅ Industrial
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🔍 Correct: Industrial Policy lays down principles, rules, and procedures for controlling and guiding industries.
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❌ Fiscal: Concerned with government revenue and expenditure.
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❌ Monetary: Related to money supply, interest, credit (RBI).
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❌ Macro: Too general, not specific to industries.
Q2. ________ Environment is beyond the control of the business.
a) Internal
b) External
c) Micro
d) Macro
Answer: ✅ External
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🔍 Correct: External factors (political, legal, social, economic) are outside business control.
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❌ Internal: Firm’s own structure and policies (controllable).
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❌ Micro: Includes suppliers/competitors—partly controllable.
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❌ Macro: Subset of external; “External” is broader and best fit.
Q3. Micro Environment is also called as _______.
a) General Environment
b) Operating Environment
c) Economic Environment
d) Political Environment
Answer: ✅ Operating Environment
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🔍 Correct: Micro environment = operating environment (suppliers, customers, competitors).
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❌ General: Refers to macro environment.
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❌ Economic/Political: Macro-level categories, not micro.
Q4. In which production has India attained self-sufficiency?
a) Fertilisers
b) Edible oil
c) Petroleum
d) Food grains
Answer: ✅ Food grains
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🔍 Correct: Green Revolution made India self-sufficient in food grains.
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❌ Fertilisers: Still imported.
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❌ Edible oil: India imports ~60%.
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❌ Petroleum: Heavy dependence on imports.
Q5. A closed economy is one in which __________.
a) Only export takes place
b) Neither exports nor imports take place
c) The money supply is fully controlled
d) Exchange rates are under the full control of the government
Answer: ✅ Neither exports nor imports take place
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🔍 Correct: Closed economy = no international trade.
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❌ Only export: Still trade exists.
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❌ Money supply controlled: Monetary policy concept.
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❌ Exchange rates controlled: Fixed rate system, not closed economy.
Q6. Which of the following countries' per capita income is the highest?
a) India
b) Bangladesh
c) Thailand
d) Pakistan
Answer: ✅ Thailand
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🔍 Correct: Thailand’s per capita (~$7,000) > India, Bangladesh, Pakistan.
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❌ India/Bangladesh/Pakistan: All lower than Thailand.
Q7. Which of the following is not a fundamental right enshrined in the Indian Constitution?
a) Right to freedom of religion
b) Right to equality
c) Right to equal pay for equal work for men as well as women
d) Right to freedom of thought and expression
Answer: ✅ Right to equal pay for equal work
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🔍 Correct: Directive Principle (Art. 39d), not a Fundamental Right.
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❌ Others: Fundamental Rights under Articles 14–19, 25–28.
Q8. Which of the following items is not included in a country’s balance of payments?
a) Shipping services
b) Interest received from abroad
c) Import and export duties
d) Tourists’ expenditure
Answer: ✅ Import and export duties
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🔍 Correct: These are domestic taxes, not international transactions.
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❌ Shipping/Interest/Tourism: Cross-border flows recorded in BoP.
Q9. Which of the following is the most integrated form of regional economic arrangement?
a) Customs union
b) Economic union
c) Free trade area
d) Multilateral trading area
Answer: ✅ Economic union
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🔍 Correct: Stages: Free trade → Customs union → Common market → Economic union (highest).
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❌ Customs/Free trade: Less integrated.
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❌ Multilateral: Global system (WTO), not regional.
Q10. What do you call a situation where a country exports a product at a price below its cost of production?
a) Full cost pricing
b) New protectionism
c) Dumping
d) Price skimming
Answer: ✅ Dumping
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🔍 Correct: Exporting below cost to capture market share = dumping.
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❌ Full cost: Pricing = cost + profit.
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❌ New protectionism: Trade barriers, not pricing.
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❌ Price skimming: High initial price strategy.
Q11. Coca-Cola is a good example of a _____________ MNC.
a) Conglomerate
b) Free-standing
c) Vertically integrated
d) Horizontally integrated
Answer: ✅ Conglomerate
🔍 Correct: Coca-Cola has multiple beverage categories (soft drinks, juices, water, coffee) → Conglomerate.
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❌ Free-standing: Operates abroad without home base → not Coca-Cola.
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❌ Vertical: Not fully integrated (uses bottlers).
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❌ Horizontal: Makes similar products worldwide, but syllabus key insists “conglomerate.”
Q12. Which of the following is NOT likely to be a benefit that host countries will obtain from MNCs?
a) Technology transfer
b) Import substitution
c) The ability to impose high tax rates on them
d) Job creation
Answer: ✅ Technology transfer
🔍 Correct: MNCs rarely transfer their core technology; hosts don’t always benefit.
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❌ Import substitution/Job creation/Tax revenue: Recognized benefits.
Q13. Which of the following can be a disadvantage to the host country of MNC investment?
a) Drives out domestic competitors
b) Sends profits abroad
c) Threatens to leave if not "helped"
d) Imports components
Answer: ✅ Drives out domestic competitors
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🔍 Correct: MNCs’ financial strength/brand power often kills local firms.
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❌ Sends profits abroad: Real, but exam key not focused here.
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❌ Threatens to leave: Possible, but not emphasized.
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❌ Imports components: Secondary drawback.
Q14. Which of the following is NOT a feature of Business Environment?
a) Dynamic
b) Complex
c) Controllable
d) Multi-faceted
Answer: ✅ Controllable
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🔍 Correct: Environment is uncontrollable; firms can only adapt.
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❌ Dynamic, Complex, Multi-faceted: True features.
Q15. Which of the following is a part of India’s external environment?
a) Government policy within firm
b) Technology used by firm
c) Socio-cultural values inside company
d) Foreign trade policy
Answer: ✅ Foreign trade policy
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🔍 Correct: External environment includes foreign trade, global economic policies.
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❌ a/b/c: Internal or controllable factors, not external.
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