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If the government increases the investment limit in a sector, what will be the main effect?

Answer and explanation

Correct answer: Possibility of investment can increase

An investment limit is a government rule that determines how much capital may enter or be held in a sector. When the government raises that limit, firms and investors receive greater legal scope to commit funds, expand capacity, enter the sector or form larger projects. Consequently, the possibility of investment can increase, so option A is correct. The word “can” is important: the policy creates permission or opportunity, but actual investment still depends on expected returns, demand and risk. It does not require all shops to close, eliminate customer demand or reduce rainfall. B, C and D therefore have no logical connection with the stated political decision.

Related tags

Business-EnvironmentPolitical-EnvironmentInvestment-PolicyPolitical EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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