Question

Assertion (A): At the break-even level of income, the value of Average Propensity to Consume (APC) is zero.

Reason (R): Sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to 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.

Answer 1

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

Explanation:

At Break-even level of Income, Consumption equals Income. Here, APC = 1. Sum of APC and APS is 1 as whole income is either consumed or saved.