Metres of cloth, tonnes of rice and numbers of machines cannot be added directly. To get a measure of the total final output of an economy, the common measuring rod used is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Money
Cloth, rice and machines are measured in different units. To add them, each is valued in money, the common measuring rod.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … Now, to have a comprehensive idea of the total flow of production in the economy, we need to have a quantitative measure of the aggregate level of final goods produced in the economy. However, in order to get a quantitative assessment – a measure of the total final goods and services produced in the economy – it is obvious that we need a common measuring rod. We cannot add metres of cloth produced to tonnes of rice or number of automobiles or machines. Our common measuring rod is money. Since each of these commodities is produced for sale, the sum total of the monetary value of these diverse commodities gives us a measure of final output. …” |