Read the following statements carefully:
Statement 1: The consumption curve is an upward sloping straight line curve due to the
direct relationship between income and consumption and the assumption of constant
Marginal Propensity to Consume.
Statement 2: Aggregate Demand curve and Consumption curve are parallel to each other.
In the light of the given statements, choose the correct alternative from the following:
- 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:
C. Both statements 1 and 2 are true