Question

Briefly discuss any two precautions to be taken while calculating national income by the Value Added method.

Answer 1

Precautions to be taken while calculating National Income by value-added method are given below:

1. The sale and purchase of secondhand products should be excluded from national income. The value of these commodities is already included in the year of production. There is no new production this year.
2. The value of items kept for personal use should be reflected in national income. Production occurs when economic factors provide productive services. Despite the fact that it has not yet been sold on the market.