Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion: Brokers’ commission on sale and purchase of second hand goods is included in national income.
Reasoning: It is a compensation for rendering productive services.
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is true but Reason (R) is false.

Assertion (A) is false but Reason (R) is true.

Correct Answer:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation:

The correct answer is Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Assertion: Brokers’ commission on sale and purchase of second hand goods is included in national income. This is correct. While the sale of the good itself isn't new production (it's a transfer of ownership), the broker's service in facilitating the transaction is considered new production. Their work adds value by bringing buyers and sellers together.


Reasoning: It is a compensation for rendering productive services. This is also correct. Brokers earn their commission by facilitating transactions between buyers and sellers, which is considered a productive service.

Reason (R) explains Assertion (A) because it provides a logical justification for why brokers’ commission on the sale and purchase of second-hand goods is included in national income.