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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A...
In the Keynesian analysis, the equilibrium level of employment and income is determined at the point of equality between saving and investment. Saving is a function of income, i.e. S = f (Y). It is defined as the excess of income over consumption, S=Y-C and income is equal to consumption plus investment.
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Directions : In the following questions, a statement of Assertion (A...
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
Explanation:
The given statement presents an assertion followed by a reason. Let's analyze each statement individually and then determine their relationship.
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
When the level of savings (S) in an economy exceeds the level of investment (I), it means that people are saving more than what is being invested. In such a situation, the total income in the economy tends to decrease.
- Savings (S) is the portion of income that is not consumed but instead saved by households and businesses.
- Investment (I) refers to the expenditure on capital goods such as factories, machinery, and equipment that are used to produce goods and services in the future.
When savings exceed investment, it implies that there is a lack of demand for goods and services in the economy. As a result, businesses reduce their production and income decreases, leading to a decrease in equilibrium income.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
According to Keynesian economics, the equilibrium level of income and employment is determined by the equality of aggregate demand and aggregate supply. This equilibrium point is where investments and savings are equal.
- Aggregate demand refers to the total demand for goods and services in an economy.
- Aggregate supply refers to the total supply of goods and services in an economy.
At the equilibrium level, the total spending on goods and services (aggregate demand) is equal to the total production of goods and services (aggregate supply). This balance ensures that there is neither excess demand nor excess supply in the economy.
Conclusion:
Both the assertion (A) and reason (R) are true, and the reason (R) is the correct explanation of the assertion (A). When savings exceed investment, there is a lack of demand in the economy, leading to a decrease in equilibrium income. Keynesian theory states that the equilibrium level of income is determined by the equality of investment and savings.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
Explanation:
The given statement presents an assertion followed by a reason. Let's analyze each statement individually and then determine their relationship.
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
When the level of savings (S) in an economy exceeds the level of investment (I), it means that people are saving more than what is being invested. In such a situation, the total income in the economy tends to decrease.
- Savings (S) is the portion of income that is not consumed but instead saved by households and businesses.
- Investment (I) refers to the expenditure on capital goods such as factories, machinery, and equipment that are used to produce goods and services in the future.
When savings exceed investment, it implies that there is a lack of demand for goods and services in the economy. As a result, businesses reduce their production and income decreases, leading to a decrease in equilibrium income.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
According to Keynesian economics, the equilibrium level of income and employment is determined by the equality of aggregate demand and aggregate supply. This equilibrium point is where investments and savings are equal.
- Aggregate demand refers to the total demand for goods and services in an economy.
- Aggregate supply refers to the total supply of goods and services in an economy.
At the equilibrium level, the total spending on goods and services (aggregate demand) is equal to the total production of goods and services (aggregate supply). This balance ensures that there is neither excess demand nor excess supply in the economy.
Conclusion:
Both the assertion (A) and reason (R) are true, and the reason (R) is the correct explanation of the assertion (A). When savings exceed investment, there is a lack of demand in the economy, leading to a decrease in equilibrium income. Keynesian theory states that the equilibrium level of income is determined by the equality of investment and savings.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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