Maharashtra State BoardHSC Commerce 12th Board Exam
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Answer the Following Question: What is Double Counting of National Income? - Economics

Answer in Brief

Answer the following question:

What is double counting of national income?

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Solution

One of the major problems involved in the estimation of national income by the value added method is the problem of double counting. Double counting refers to a situation where the value of a good is taken into account (counted) more than once. This is particularly so for intermediate goods. Such a problem occurs because, for every producer, the commodity he sells is the final commodity. Thus, if the value of the intermediate good is taken into account every single time, it leads to its estimation more than once, one when it was produced and second as a part of final good. This leads to overestimation of the value of final good.

Concept: Concept of National Income
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APPEARS IN

Micheal Vaz Economics HSC 12th Standard Maharashtra State Board
Chapter 9 National Income
Exercise | Q 1.1 | Page 80
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