Explain the relationship between income of the buyers and deman

Subject

Economics

Class

CBSE Class 12

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Sample Papers

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 Multiple Choice QuestionsShort Answer Type

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21.

Explain 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.

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22.

How can increase in foreign direct investment affect the price of foreign exchange? 

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23.

What are demand deposits? 

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24.

Give one example of “externality” which reduces welfare of the people. 

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25.

Give two examples of indirect taxes. 

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26.

What is a Government Budget? 

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27.

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? 

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28.

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each. 

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29.

Distinguish between revenue deficit and fiscal deficit.

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30.

Explain any one objective of Government Budget. 

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