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Question : Assertion: An increase in aggregate supply will always result in economic growth.

Reason: When aggregate supply increases, it leads to increased production and output, which is indicative of economic growth.

Option 1: Both Assertion and Reason are correct, and the Reason is the correct explanation of the Assertion.
 

Option 2: Both Assertion and Reason are correct, but the Reason is NOT the correct explanation of the Assertion.
 

Option 3: Assertion is correct, but the Reason is incorrect.

 

Option 4: Assertion is incorrect, but the reason is correct


Team Careers360 10th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

Correct Answer: Assertion is incorrect, but the reason is correct


Solution : The answer is (D) Assertion is incorrect, but the reason is correct.

The Assertion is incorrect. Economic growth depends on various factors, including aggregate demand, investment, government policies, consumer spending, and external conditions. While an increase in aggregate supply can be a positive factor for economic growth, it does not guarantee economic growth on its own.

The Reason is indicative of economic growth. This Reason is correct in highlighting that an increase in aggregate supply can lead to increased production and output. When supply expands, businesses can produce more goods and services. However, as mentioned earlier, economic growth is influenced by multiple factors, and the relationship between aggregate supply and economic growth is more complex.

Therefore, while the reason is correct in explaining the impact of increased production and output, the initial assertion that an increase in aggregate supply will always result in economic growth is incorrect.

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