Question

Given below are two statements : one is labelled as Assertion (A) and the other is labelled as Reason (R).

Assertion (A) : In Leontief's Open Input-Output Model, some of the production is consumed by those who produce it and rest of the production is consumed by external bodies such as households, Government and so on.

Reason (R) : The objective in the Leontief's Open Input-Output Model is to find the relative income of each participant in the system.

In the light of the above statements, choose the most appropriate answer from the options given below :

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Hint:

The open Leontief model finds the output each sector must produce to satisfy the final demand.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:

• We judge the Assertion and the Reason about Leontief's open input-output model separately.

Step 2: Detailed Explanation:

• Assertion (A): In the open model, part of each industry's output is used up by the industries themselves (the internal demand) and the rest goes to the external demand of households, government and so on. So (A) is correct.

• Reason (R): The aim of the open model is to find the total output each industry must produce to meet a given external (final) demand. It is not to find the relative income of each participant. So (R) is not correct.

• Hence (A) is correct but (R) is not correct.

Step 3: Final Answer:
The correct option is (C).