Question : Read the following statements of
Assertion (A) and Reason(R) and choose the correct alternative:
Assertion (A)- Saving curve will have a negative intercept on Y-axis of the same magnitude as the consumption curve has positive intercept on Y-axis.
Reason(R)- If consumption is positive at Y=0, there would be dissavings of the same mangnitude.
Option 1: Both A and R are correct and R is correct explanation
Option 2: A is correct and R is wrong.
Option 3: R is correct and A is wrong
Option 4: Both A and R are correct and R is not the correct explanation of A.
Correct Answer:
Both A and R are correct and R is correct explanation
Solution :
The saving curve will have a negative intercept on Y-axis of the same magnitude as the consumption curve has positive intercept on the X-axis. It happens because it consumption is positive is zero level of income then they would be savings of the same magnitude.
Hence, Option A is correct.
