Impact of Strike on National Income Measurement

Steps:

• Identify direct loss from strike: production halts, valued at $100,000 in output.
• Subtract intermediate goods or costs already counted: $30,000 in raw materials not value-added.
• Account for only value-added component in GDP: national income records $70,000 reduction.
• Confirm no multiplier effects apply here, as question specifies recorded level.

Why A is correct:

• National income (e.g., GNP or NNP) measures value added; strike reduces it by $70,000, per GDP formula excluding intermediates.

Why the others are wrong:

• B: Ignores full value-added loss, understates impact.
• C: Confuses partial output drop with total recorded reduction.
• D: Includes unadjusted gross output, violating value-added definition.

Final answer: A