Ram expenditure and saving are in the ratio 5:3. If his income increase by 12% and expenditure by 15% then by how much % does his saving increase
Answers
Incomes and Expenses make up important parts of the economy as they are related to the overall growth of the economy.
Current Income:
It is the money received on short term basis.
Inflow of money.
Current Expenses:
It is the money payed or spent on short term basis.
Outflow of money.
When the current income is less than the current expenditure then that has the following affects:-
1- This shows a trade deficit in the balance of payments.
2- This has negative effects on economic growth
3- Bad affect on the stability of the country.
4- Negative affect on the currency value, which depreciates, weakening our currency. And if we sell goods as exports then we don't get as much money as we should.
5- This leads us to using reserve currencies.
6- Negatively effects the interest rates, further weakening the monetary stance of the economy.
7- Leads to rising prices of inflation.
This overall effects the welfare of society in a bad way.