Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): The maximum value of Marginal Propensity to Save (MPS) can be unity.
Reason (R): At the break-even level of income, savings are zero.
Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): The maximum value of Marginal Propensity to Save (MPS) can be unity.
Reason (R): At the break-even level of income, savings are zero.
Show Hint
- 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, but 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.
The Correct Option is B
Solution and Explanation
Assertion (A): This is true because the maximum value of MPS can be unity when all additional income is saved and none is consumed.
Reason (R): This is true because, at the break-even level of income, all income is consumed, leaving savings at zero.
Conclusion: Although both statements are correct, the reason does not explain the assertion.
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