CBSE 2025, Compartment, Set 1

Question

Read the following statements carefully:
Statement 1: The value of Average Propensity to Save (APS) can be greater than one.
Statement 2: Break-even point is the level at which level of consumption is equal to the income.

In the light of the given statements, choose the correct alternative from the following: A). Statement 1 is true and Statement 2 is false. B). Statement 1 is false and Statement 2 is true. C). Both Statements 1 and 2 are true. D). Both Statements 1 and 2 are false.

Edvaya · Accepted Answer

The correct answer is Statement 1 is false and Statement 2 is true.. Statement 1 is false because Average Propensity to Save (APS = S/Y) can never be greater than one. Since saving is a part of income, savings can never exceed total income. Statement 2 is true as the break-even point in economics is strictly defined as the point where Income = Consumption (and Savings = 0).

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Economics > Introductory Macroeconomics > Determination Of Income Employment

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