# CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics: Questions 425 - 433 of 523

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## Question number: 425

Essay Question▾

### Describe in Detail

How can a government budget help in reducing inequalities of income? Explain.

### Explanation

Reducing inequalities of income is one type of objectives of government budget. The government is promoting right distribution of income in an economy. It is taxation policy the government taxes the higher income groups in economy.

Power extracted from the higher income groups through taxes is then transferred to poor

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## Question number: 426

Essay Question▾

### Describe in Detail

While estimating national income, how will you treat the following? Give reasons for your answer.

(i) Imputed rent of self-occupied houses.

(iii) Financial help received by flood victims

### Explanation

(i) Imputed rent of self-occupied houses is included in estimation of national income as self-occupied house contain some value.

(ii) Interest received on debentures included in estimation of national income as it is part of factor income.

(iii) Financial help received by flood victims is included as transfer payment.

## Question number: 427

True-False▾

### Following Statement is true or false:

When there are diminishing returns to a factor, total product always decreases.

## Question number: 428

» Consumer's Equilibrium and Demand » Demand » Elasticity of Demand

Essay Question▾

### Describe in Detail

Explain the geometric method of measuring price elasticity of demand.

### Explanation

In geometric method we measure elasticity of demand at different points on demand curve. In this method elasticity of demand at any point on straight line demand curve is ratio of lower segment and upper segment of demand curve.

It is represented as:

=

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## Question number: 429

Essay Question▾

### Describe in Detail

What changes will take place to bring an economy in equilibrium if

(I) planned savings are greater than planned investment and

(ii) Planned savings are less than planned investment

### Explanation

(I) planned savings are greater than planned investment: - This type of situation occurs when planned savings are greater than planned investment that is total consumption expenditure is smaller than required purchase supply of goods and services.

Low consumption means the required output is less than planned output. The producer

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## Question number: 430

True-False▾

### Following Statement is true or false:

When marginal cost rises, average cost will also rise.

## Question number: 431

» Consumer's Equilibrium and Demand » Demand » Demand Curve

Essay Question▾

### Describe in Detail

Draw a straight line demand curve and show on it a point at which

(i) Price elasticity of demand > 1

(ii) Price elasticity of demand < 1

(iii) Price elasticity of demand = 1

### Explanation

(i) Price elasticity of demand > 1

(ii) Price elasticity of demand < 1

(iii) Price elasticity of demand

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## Question number: 432

### Write in Short

Give the meaning of demand deposits of commercial banks.

## Question number: 433

» Consumer's Equilibrium and Demand » Demand » Demand Schedule

Essay Question▾

### Describe in Detail

State the law of demand and show it with the help of schedule.

### Explanation

Law of demand states that all other factors being equal, as the price of a commodity increases, quantity demanded falls, likewise, as the price of a product falls, quantity demanded increases. There is a negative relationship between price and quantity demanded.

Example is given below:

 Price (Rs) Quantity demanded of
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