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BBA Business Environment June 2012 Solved Question Paper With Answers

3. Explain privatisation.

Ans.. Privatization is the general process of involving

the private sector in the ownership or operation of a state owned enterprise.

4. Explain credit control.

Ans. Credit control is the system used by a business to make certain that it gives credit only to customers who are able to pay, and that customers pay on time.


(Detailed Answer Questions)

Note: Attempt any three questions out of the following five questions. Each question carries 15
marks. Answer is required in detail. (15 x3=45)

5. What is meant by business environment? ’Explain the internal and external factors of business environment.

Ans. Business comprises all profit seeking activities and enterprises that provide goods and services necessary to an
economic system. It is the economic pulse to a nation, striving to increase society’s standards of living. Profit is a mechanism for motivating these activities.

6. “Capitalism should not be end but should be reformed.” Discuss this statement.

Ans. Meaning and Definition of Capitalism: In a capitalist economy, households and firms are
the basic production units. The capitalist system is also known as free enterprise economy and market economy. It is characterized by the private ownership of the means of production, individual decision-making and the use of the market mechanism to carry out the decision of individual participants and facilitate the flow of goods and services in markets.”

According to Carl Marx, “Capitalism is a particular mode of organization of production which is characterized by (a) Wage slavery (b) Production and (c) Creations of surplus value.

According to Looks and Hoots, “Capitalism isa system of economic organization featured by the private ownership and the use for private profit of man-made and nature made capital.”

In a pure market economy all productive activities are privately owned or supposed to being owned by the state. The goods and services that a country produces and the quantity in which they are produced are not planned by anyone.

ether, production is determined by the interaction of supply and demand and signaled to produce through the price system. If demand for a product exceeds supply, prices will rise, signaling producers to produce more if supply exceeds demand, prices will fall, signaling produces to produce less. In this system consumers are sovereign.

7. Explain the limitations of fiscal policy of India and give the suggestions for . improvement of fiscal policy.

Ans. Full employment in an economy means a state where all the persons who have readiness to work at current rates of wages get work to do. In no case it means absence or zero unemployment in the economy. Not all these seeking employment will be employed at any one time because, in a changing economy some persons will always be between jobs and seeking new employment.

In an underdeveloped economy, the problem of unemployment is slightly different from that in an advanced economy, is that in developed economies it is oriented primarily to the necessity of maintaining full employment against cyclical depression. On the other hand, in the underdeveloped economy, the problem has two dimensions, namely cyclical as well as disguised. The cyclical unemployment in the underdeveloped economy originates from external causes. Mostly the under developed countries, which are export oriented as they export their primary products to advanced countries, through full in prices of primary goods exported by them to the developed countries.

Thus, cyclical unemployment in the underdeveloped countries can be traced back to external factors. In underdeveloped countries, disguised unemployment, refers to a situation where too many people are engaged in agriculture on account or over-population and unavailability of sufficient employment opportunities, people gravitate to land and generally more people than required are engaged in agriculture. In other words, if some people engaged in agriculture are withdrawn, this will not affect the agricultural production, which will remain as before. This is disguised unemployment. To overcome the problem of disguised unemployment also, a policy of increased capital formation and planned economic development, through which it can diversify and modernize the economy, is required. Hence, the fiscal policy in an underdeveloped country should aim at increasing the. rate of capital formation to deal with its unemployment problem in an effective manner.

In underdeveloped economies, fiscal policy alone cannot effect the results and side by side monetary policy should also be combined with fiscal policy in inflationary as well as depression condition. Only this combination and coordination between fiscal and monetary policy can give lasting results, as both are important instruments for securing economic stabilization in country. Thus, a judicious combination of two policy is necessary to obtain ever lasting results.

To achieve the conditions of full employment following measures have been suggested by J.M.

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