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(a) If a buyer buys less of a commodity when his income falls, how will his demand curve change? Illustrate your answer with a diagram.

(b) State two factors which affect productivity of land.

(c) Give two differences between recurring deposits and fixed deposits.

(d) What is overdraft facility ?

(e) State any two reasons for the growth of public expenditure in a country like India in recent times.

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(a) A buyer will buy less commodity with fall in income for a normal good. Such a situation is known as decrease in demand. The given figure represents the situation of decrease in demand. In the figure, OP is the original price at which quantity demanded is OQ. With a fall in income demand decreases to D1 D1.

(b) (i) Natural Factors : Productivity of land is largely determined by its natural qualities, such as fertility, slope of land, climate, chemical and biological properties of the soil. 

(ii) Human Factors : Land cannot produce anything by itself. Man has to apply labour on it to produce for himself. Therefore, productivity of land also depends upon the knowledge and training of workers. A wise farmer can take more produce from the same land than an untrained farmer. 

(c) (i) Fixed or time deposit account : Cash is deposited in this account for a fixed time period. They are not payable on demand and do not enjoy chequing facilities. 

(ii) Recurring deposit account : Under this account a specialised amount is deposited every month for specified period say 12, 24, 36 or 60 months. 

(d) Under this borrower is allowed to over draw the current account balance. 

(e) 

(i) Defence : An important factor responsible for increase in public expenditure is the large defence expenditure. The political situation all over the world is uncertain and insecure. The arms race betw een countries and development of sophisticated armaments and nuclear weapons have resulted in massive defence expenditure. In India, the defence expenditure has increased substantially in view of continued aggression by Pakistan and urgency of national security. 

(ii) Population Growth : Another factor responsible for the increase in public expenditure is the growth in population. In India, the population has increased at an alarming rate. Growth in population on this scale has increased the demand for various government services like education, public health, transport, administration and maintenance of law and order. It has also increased the demand for various development activities of the government.

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