CA Foundation · Business Economics · Nature and Scope of Business Economics
Which of the following features of Business Economics is correctly stated?
Business Economics is micro-economic in character since it focuses on individual firms, yet it also studies macro-economic factors such as inflation, interest rates and government policy because they shape the business environment in which managers decide.
- AIt is purely a theoretical science with no link to decision-making
- BIt is a micro-economic discipline in character that also takes note of macro-economic factors forming the business environmentCorrect
- CIt deals only with the economy as a whole and ignores individual firms
- DIt is concerned only with the study of the past and does not help in forecasting
Explanation
Business Economics is essentially micro-economic in nature because it deals with the problems of individual firms, but it also considers macro factors such as inflation, interest rates and policy as part of the business environment. The other options deny its practical, firm-level or forward-looking character.
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