Short Answer TypeExplain the relationship between income of the buyers and demand for a good.
Income of the Buyer and the Demand for a Good:
Income of consumer is an important determinant of demand. The rise and fall of the demand for a good as per the rise in income of consumers depends upon the nature of good. Normal goods have a positive income elasticity of demand, so as consumers' income rises, more will be the demand. A rise in the income of the consumer will increase the demand for the good. In the case of Luxury goods and services, demand rises more than proportionate to a change in income. Inferior goods have a negative income elasticity of demand meaning that demand falls as income rises.
Explain the problem of double coincidence of wants faced under barter system. How has money solved it?
Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each.
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