Match List I with List II.
| List I (Business environment) |
List II (Dimension) |
| (A) Economic | (I) KYC compliance is mandatory in mutual funds investment |
| (B) Social | (II) Construction companies prefer low longer-term interest rates |
| (C) Legal | (III) The government maintains general stability and peace in the country |
| (D) Political | (IV) Rise in demand for goods during festivals |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A-II, B-IV, C-I, D-III
(A) Economic — this matches (II) Construction companies prefer low longer-term interest rates. Interest rates are an economic factor. When long-term rates are low, people take loans to buy homes. So construction companies sell more.
(B) Social — this matches (IV) Rise in demand for goods during festivals. Festivals are part of the customs and traditions of society. Diwali, Eid or Christmas increase the demand for sweets, gifts and clothes.
(C) Legal — this matches (I) KYC compliance is mandatory in mutual funds investment. A KYC rule is made by a government authority. Following such rules is part of the legal environment.
(D) Political — this matches (III) The government maintains general stability and peace in the country. The political environment covers peace and stability in the country and the government’s attitude towards business.
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. …” “Social Environment … Traditions define social practices that have lasted for decades or even centuries. For example, the celebration of Diwali, Eid, Christmas, and Guru Parv in India provides significant financial opportunities for greetings card companies, sweets or confectionery manufacturers, tailoring outlets and many other related business. …” “Political Environment: Political environment includes political conditions such as general stability and peace in the coun-try and specific attitudes that elected government representatives hold towards business. The significance of political conditions in business success lies in the predictability of business activities under stable political conditions. …” “Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— centre, state or local. …” |