Consider the following Assertion (A) and Reason (R) and choose the correct code:

Assertion (A) :

The National Product measures all goods and services that arise out of economic activity, whereas National Income is the sum of all incomes as a result of the economic activity. These two are synonymous.

Reason (R) :

The Production of goods and services is the outcome of the use of capital and labour, along with the raw materials, and this automatically generates income.

Key Points

• National Product refers to the total value of all goods and services produced within a country during a specific period.
• National Income is the total income earned by a country’s residents and businesses, including any foreign investments, during a specific period.
• Both National Product and National Income essentially measure the economic activity and are often used interchangeably.
• The reason (R) explains that the production of goods and services automatically generates income, which aligns with the assertion (A).

Additional Information

• National Product
  • It can be measured as Gross Domestic Product (GDP) which is the total value of all goods and services produced within a country.
  • GDP is used to gauge the health of a country's economy.
  • Another measure is Gross National Product (GNP), which includes the value of goods and services produced by the country's residents both domestically and abroad.
• National Income
  • It includes wages, rents, interests, and profits earned by the residents of a country.
  • National Income can be measured using various methods such as the income method, expenditure method, and production method.
  • It is used to assess the economic performance of a country and to formulate economic policies.
• Economic Activity
  • Economic activity refers to the production, distribution, and consumption of goods and services.
  • It is driven by factors such as capital, labor, and raw materials.
  • Economic activity generates income and is a key indicator of economic health.