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If rising loan interest rate makes a company postpone its expansion plan which dimension is mainly involved?

Answer and explanation

Correct answer: Economic dimension

Direct answer: Option A, the economic dimension. Interest is the price paid for borrowed money. When the interest rate rises, loans become more expensive. The company’s cost of capital increases, so expansion requires more money and may no longer be affordable or attractive. It therefore postpones expansion. Option A is correct because interest rates, borrowing, investment, capital cost, income, inflation, and economic growth are economic factors. Option B, social dimension, covers changes in population, lifestyle, values, and consumer habits, not the cost of a loan. Option C, technological dimension, covers inventions, machines, research, and production technology; no technology change is described. Option D, legal dimension, covers laws, regulations, and compliance; the question gives a market-finance change, not a rule. Reasoning chain: higher interest rate → costlier loan → higher capital cost → delayed expansion. Memory cue: loan, interest, inflation, income, or purchasing power usually signals the economic dimension.

Related tags

Business Environment Dimensions Economic InterestDimensions Of Business EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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