CBSE 2025, Set 1

Question

(b) (i) Gauhar, has recently completed her fashion designing studies and started a boutique. To produce dresses for sale, she purchased various materials, including a sewing machine, fabric, buttons and thread. These items are essential for producing the dresses.
Classify the material purchased by Gauhar as Final or Intermediate goods, giving valid reasons in support of the classifications.

(ii) "National Income is always equal to Domestic income in a two sector economy."
Defend or refute the given statement with valid reasons.

Edvaya · Accepted Answer

The correct answer is Subjective. **(i) Classification of Goods:**
Sewing machine purchased by Gauhar for her boutique can be classified as a **Final Good**. As the same will be used for investment purposes.
Fabric, buttons and thread can be classified as **intermediate goods**. As they are completely used up in the further production of goods and services in the same year.

**(ii) Defend or Refute:**
The given statement is **defended**.
National Income = Domestic Income + Net Factor Income from Abroad
In a two sector economy, due to no interaction with the external sector, Net Factor Income from Abroad has no significance. Hence, National Income is always equal to Domestic Income.

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Economics > Introductory Macroeconomics > National Income Aggregates

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