Read the following statements - Assertion (A) and Reason (R): .
Assertion: Investment goods are part of the intermediate goods.
Reasoning: Investment goods produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years.
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 4
The correct answer is option 4: Assertion (A) is false but Reason (R) is true.
Assertion: Investment goods are part of the intermediate goods. This is incorrect. Investment goods are not considered intermediate goods. Intermediate goods are used to produce other goods within the same year, whereas investment goods (or capital goods) are durable goods used over multiple years to produce other goods and services. The 'investment goods’ (such as machines) are also part of the final goods – they are not intermediate goods like raw materials. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years.
Reasoning: Investment goods produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years. This is correct. Investment goods are capital goods that provide utility over several years and are not consumed in the production of other goods within the same year. They contribute to future production and economic capacity.