Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

In the question given below, there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options.

Assertion (A)- Real flow refers to the flow of goods and services across different sectors of the economy.

Reason (R)- Nominal or money flow is the flow of factor payments and payments of goods and services between households and firms.

 

Options:

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

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

(A) Is true but (R) is false.

(A) Is false but (R) is true.

Correct Answer:

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

Explanation:

Real flow: Real flow refers to the flow of goods and services across different sectors of the economy. It is also known as the flow of physical output among the sectors as either goods or services are exchanged among sectors.

Nominal flow: Nominal or money flow is the flow of factor payments and payments of goods and services between households and firms. It is the flow of monetary transactions among the sectors. It is also known as money flow an only money is being exchanged among factors.