Question

Statement 1: Consumption and Savings are the components of National output of an economy. 

Statement 2: Higher level of Income often leads to lower savings. 

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. 

Answer 1

Statement 1 is true and Statement 2 is false. 

Explanation:

1. Statement 1 is correct, as national production or income is the sum of consumption and savings in the economy. Y = C + S
2. Statement 2 is incorrect, as rising income leads to more savings in an economy.