Economics : 2008 : CBSE : [ Delhi ] : Set II

Expenses incurred in the production of a commodity is called cost.

Revenue refers to amount received from sale of goods and services.

Market refers to a situation in which the buyers and sellers come in close contact with each other for purchase and sale of goods and services.

Opportunity cost refers to the cost of next best alternative foregone. For example a farmer has grown wheat in his farm but if he would not have grown wheat then he would have grown rice. Hence rice is his opportunity cost.

Market demand refers to the total demand for the commodity in the market at different prices. Hence it is calculated by adding the individual demands at different prices.

When aggregate demand is less than the level of output at full employment, then the deficiency or gap is called deflationary gap.

Central bank is the apex bank of any country. Its major functions are to issue currency notes and to act as a banker to the Government.

General objective of a government budget is as under:

Economic growth: To promote rapid economic growth so as to improve living standard of the people.

Forces of supply and demand in the foreign market determine flexible exchange rate. Here the value of a currency is left completely free to be determined by market forces of demand and supply of foreign exchange

Full employment signifies a situation in which all the resources available in the economy are fully employed.