Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion (A): The total flow of production in the economy, is measured by the aggregate level of final goods produced in the economy.
Reason(R): Counting intermediate goods in production, gives a precise and effective measure of economic activity.
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:

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

Explanation:

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

Counting intermediate goods leads to double counting.