Question

State with reason whether you agree or disagree with the following statement:

The money value of intermediate goods is not included in the estimation of national income.

Answer 1

We agree with the above statement. Only the value of final goods and services are included in the estimation of national income and the value of intermediate goods is not included in the national income. This is because the value of intermediate goods is already reflected in the value of the final goods. Thus, if the value of these goods is also included in the current year, it will lead to the problem of double counting of the value of those goods.