CBSE 2024, Set 2

Question

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. A). Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is true, but Reason (R) is false. D). Assertion (A) is false, but Reason (R) is true.

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).. Assertion (A) is true because if the entire additional income is saved, MPS = 1. Reason (R) is also true because the break-even point is where consumption equals income ($C = Y$), meaning savings are zero. However, R is not the correct explanation for why the maximum value of MPS is unity.

Edvaya Target

Edvaya Aspire

Take a Free Mock Test

Target Subjects

Aspire Subjects

Subject Mastery

Economics > Introductory Macroeconomics > Determination Of Income Employment

Keep Practicing

Current Question

Community Stats

Track Your Progress

Edvaya Target

We Value Your Privacy