Read the following statements - Assertion (A) and Reason (R):
Assertion: When planned savings is more than planned investment, national income rises.
Reason: It is due to multiplier effect that income rises due to increase in investment.
From the given alternatives choose the correct one:

Assertion (A) is false but Reason (R) is true.

The correct answer is Option 4: Assertion (A) is false but Reason (R) is true.

Assertion (A): When planned savings is more than planned investment, national income rises. This assertion is not correct. When planned savings is more than planned investment, it means that people are saving more than what is being invested. This typically leads to a decrease in national income because there is a reduction in spending, which slows down economic activity. On the other hand when planned savings is LESS than planned investment, national income rises.

Reason (R): It is due to multiplier effect that income rises due to increase in investment. This reason is true. The multiplier effect explains how an initial increase in investment leads to a larger increase in income and output due to subsequent rounds of spending.