ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -One of the best classic budgeting styles around is the envelope method. This method is great to help you avoid overspending because you literally break up your spending categories with different envelopes and place the necessary cash inside to cover your spending for the month.

Detailed explanation-2: -A simple example of opportunity cost is to let us suppose that a person is having Rs. 50000 in his hand and He has the option to keep it with himself at home or deposit in the bank which will generate interest of 4% annually so now the opportunity cost of keeping money at home is Rs. 2000 per year as opposed to Bank.

Detailed explanation-3: -Why do you think people spend so much money on their wants despite the financial costs? Some people spend so much money on their wants because they don’t create a budget or just simply think about what they actually need. They also don’t ask themselves if they can function in life without items that they want.

Detailed explanation-4: -In the short-run, fixed costs are easier to change than variable costs. When assets are greater than liabilities, you are said to be solvent. A net worth statement will be useful when you apply for a loan or credit.