Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

When at a particular price level, aggregate demand for final goods equal aggregate supply of final goods, the final goods or product in market reaches it equilibrium. Aggregate demand for final goods consist of ex-ante consumption, ex-ante investment, government spending etc. The rate of increase in ex-ante consumption due to a unit increase in income is called marginal propensity to consume.

Final goods are those goods.

Options:

Which are used in the process of production

Which are used as an intermediate good

Which are purchases for the purpose of reselling in the same year

Which are either used for consumption or for investment

Correct Answer:

Which are either used for consumption or for investment

Explanation:

The correct answer is option (4) : Which are either used for consumption or for investment

Final goods are those goods that are either used for consumption or for investment. They are goods that are ultimately consumed or used for investment purposes, rather than being used in the production process or as an intermediate good.

1. Consumption Goods :- Final goods include products that are directly consumed by individuals or households for personal satisfaction and well-being. Examples include food items, clothing, electronics, and other items used for personal enjoyment or utility.

2. Investment Goods :- Final goods also encompass items that are purchases for investment purposes. These are goods bought by businesses or individuals with the expectation that they will contribute to future production or generate income. Example include machinery, equipment, and buildings.