Assertion (A): A machine bought by a firm is a final good even though it is used in production.
Reason (R): The machine is not sold on, and is not used up, within the year it is bought.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Only a good that is resold or used up within the year is intermediate.
The machine stays in the firm's capital stock, so it is final, and R is why.

Concept: Why machines are final
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsConsumption and capital goods

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Ten questions from Basic Concepts & the Circular Flow, at your own pace.

Assertion (A): A machine bought by a firm is a final good even though it is used in production.Reason (R): The machine is not sold on, and is not used up, within the year it is bought.

Explanation

Assertion (A): A machine bought by a firm is a final good even though it is used in production.
Reason (R): The machine is not sold on, and is not used up, within the year it is bought.