Question

Assertion (A) : Intermediate goods are used up in producing final goods and services. Reason (R) : The value of final goods does not include the value of all the intermediate goods that are used in making the final goods.​

Answer 1

The assertion (A): Intermediate goods are used up in producing final goods and services. Reason (R): The value of final goods does not include the value of all the Intermediate goods that are used in making the final goods.

• The above statement is true in light of the calculation of GDP (Gross Domestic Product). The reasoning behind this is that the goods will be double-counted and will give us a wrong GDP.
• A cooking utensil is made up of stainless steel. Stainless steel is a product of iron and other metals. It is already recorded and thus the cooking utensil will not have the value of iron in its value.

Answer 2

Both assertion and reason are correct statements. But the reason is not correct for the assertion.

Explanation:

• Intermediate goods are used to produce final goods.
• For example, flour, sugar, cherries are some kind of intermediate goods that are used to produce cakes.
• Hence, it is a correct statement.
• The value of final goods does not involve the value of all intermediate goods.
• This is a correct statement as we do not involve the valuation of intermediate goods in final goods.
• Both assertion and reason are correct statements but there is no correct reason for the assertion.