Economics : 2010 : CBSE : [ Delhi ] : Set III

In perfect competition, products are homogenous with no close substitutes, but in monopolistic competition, products are differentiated with the availability of close substitutes in the market.

Demand for water is inelastic, because price does not affect its demand. It is a basic necessity.

In oligopoly market, the firms are interdependent. Decisions of one firm influences the decisions of other firms.

In perfectly competitive market, demand curve of a firm is perfectly elastic.

Components of money supply are:

a) Currency held by public

b) Bank’s demand deposits

Primary deficit is is defined as fiscal deficit minus interest payments on previous borrowings. It is calculated as:

Primary deficit = Fiscal deficit - interest payments

The excess of aggregate supply over the aggregate demand at full level of employment is known as deflationary gap.

Two sources of supply of foreign exchange are:

i)             Export of goods & services to foreign countries.

ii)           Investment by foreign countries in the domestic market.

Law of demand states that other things being constant, when price of a commodity increases its demand decreases and when price of a commodity decreases its demand increases.

It refers to the total demand of final goods & services in the economy at a given level of income during a given period of time.