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Home Questions NWD7WXFC7J
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion: Average Propensity to Save cannot have a value greater than one.
Reasoning: A person can consume more than what he/she has earned.

From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

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

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

Correct Answer:

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Explanation:

APS can never be 1 or greater than 1. APS can have a negative value if income is zero and consumption has a positive value. For example, if income is 0 and consumption is 30, then the APS value will be -0.3.

 

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