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Question
Read the following statements carefully:
Statement 1: The induced consumption shows, the direct relation between consumption and income.
Statement 2: With a certain increase in income, induced consumption also increases.
In the light of the given statements, choose the correct alternative from the following:
Options
Statement 1 is true and Statement 2 is false.
Statement 1 is false and Statement 2 is true.
Both Statements 1 and 2 are true.
Both Statements 1 and 2 are false.
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Solution
Both Statements 1 and 2 are true.
Explanation:
Induced consumption is the level of consumption that is determined by one's income. It is directly proportional to income. As income rises, so does induced consumption.
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