Question

What is double counting and what does it lead to?

Answer 1

The error of double counting in national income is the mistake that occurs when estimating the national output by averaging the value of production from all enterprises. For example, this error arises when we compute the values of both flour and roti because the value of flour has already been subtracted from the value of roti. As a result, flour’s worth will be determined. Exaggerated national output statistics would result from this kind of double counting inaccuracy.