Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Business Environment

Question:

What effect do rising disposable incomes due to an increase in the gross domestic product have on product demand?

Options:

Decrease in demand for products

No impact on product demand

Decrease in consumer spending

Increase in demand for products

Correct Answer:

Increase in demand for products

Explanation:

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 a rise in the disposable income of people due to increase in the gross domestic product of a country creates increasing demand for products.