Question

Study the two statements labelled as Assertion (A) and Reason (R).

Assertion (A): To calculate GDP (Gross Domestic Product), the money value of only final goods and services are considered.

Reason (R): To avoid over-inflating the value of GDP.

• A. Both A and R are true, and R is the correct explanation of A.
• B. Both A and R are true, but R is not the correct explanation of A.
• C. A is true, but R is false.
• D. A is false, but R is true.

Answer 1

The correct option is A Both A and R are true, and R is the correct explanation of A.

The market value of all the final goods and services produced within the country during a time period is known as GDP or Gross Domestic Product.

Together with the market value of the final goods and services, if the market value of the intermediate goods and services is also considered, there will be double counting and it will ultimately exaggerate the value of GDP.