There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion: Higher production of capital goods enables an economy to expand.
Reasoning: Higher production of capital good leads to a higher capacity of the economy to produce with the same number of labourers.

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

The correct answer is option 1: Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Assertion: Higher production of capital goods enables an economy to expand. This is correct. Producing more capital goods, such as machinery, infrastructure, and technology, increases an economy's productive capacity, which enables it to grow and expand over time.
Reasoning: Higher production of capital good leads to a higher capacity of the economy to produce with the same number of labourers. This is also correct. Capital goods improve productivity by allowing the same number of workers to produce more output, as they have better tools and equipment to work with.

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A is the correct answer. The reasoning directly explains why higher production of capital goods enables economic expansion.