Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): According to the Domar condition of debt sustainability, the public debt would not rise as proportion of GDP if the effective interest rate on government liabilities happens to be less than or equal to the growth rate of GDP at current price.
Reason (R): Growth rate of GDP of an economy at current price is bound to be less than the effective interest rate on the government bonds.
In the light of the above statements, choose the most appropriate answer from the options given below:
1
Both (A) and (R) are correct and (R) is the correct explanation of (A)
2
Both (A) and (R) are correct but (R) is not the correct explanation of (A)
3
(A) is correct but (R) is not correct
4
(A) is not correct but (R) is correct