The statement true in the context of Economic Environment is/are:
(A) Shifts in demand from vacuum tubes to transistors, from fountain pens to ballpoint, from propeller airplanes to jets, have all been responsible for creating new businesses.
(B) High inflation rates generally result in constraints on businesses as they increase the various costs of business such as the purchase of raw materials or machinery and payment of wages and salaries to employees.
(C) A rise in the disposable income of people due to an increase in the gross domestic product of a country creates an increasing demand for products.
(D) The health-and-fitness trend has become popular among numerous urban dwellers. This has created a demand for products like organic food, gyms, bottled (mineral) water and food supplements.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B) and (C) only
The economic environment covers factors such as interest rates, inflation, the disposable income of people, stock market indices and the value of the rupee.
(A) Shifts in demand from vacuum tubes to transistors, from fountain pens to ballpoint, from propeller airplanes to jets, have all been responsible for creating new businesses. — Incorrect. These shifts come from new inventions, so they belong to the technological environment.
(B) High inflation rates generally result in constraints on businesses as they increase the various costs of business such as the purchase of raw materials or machinery and payment of wages and salaries to employees. — Correct. Inflation is an economic factor. Rising prices push up every cost of the business.
(C) A rise in the disposable income of people due to an increase in the gross domestic product of a country creates an increasing demand for products. — Correct. Disposable income is also an economic factor. When people have more money to spend, they buy more.
(D) The health-and-fitness trend has become popular among numerous urban dwellers. This has created a demand for products like organic food, gyms, bottled (mineral) water and food supplements. — Incorrect. A change in lifestyle and trends is part of the social environment.
NCERT (2026-27 Edition): “Economic Environment: Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise. Short and long term interest rates significantly affect the demand for product and services. For example, in case of construction companies and automobile manufacturers, low longer-term rates are beneficial because they result in increased spending by consumers for buying homes and cars on borrowed money. Similarly, a rise in the disposable income of people due to increase in the gross domestic product of a country creates increasing demand for products. High inflation rates generally result in constraints on business enterprises as they increase the various costs of business such as the purchase of raw materials or machinery and payment of wages and salaries to employees.” |