National Income AccountingClass 12 Introductory Macroeconomics Assertion & Reason Questions

Assertion (A): The value of intermediate goods is subtracted from the value of a firm's output when calculating its value added.

Reason (R): This is done to avoid the error of double counting, as the value of intermediate goods is already incorporated in the value of the final goods.

Assertion (A): A country's capital stock is a stock variable.

Reason (R): Net investment, which represents the addition to the capital stock over a year, is a flow variable.

Assertion (A): A car purchased by a household for personal use is considered a final good.

Reason (R): A good becomes a final good based on its inherent physical characteristics, not its economic use.