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State Whether the Following Statement is True Or False. Inclusion of Value of Intermediate Goods Leads to Double Counting. - Economics

MCQ
True or False

State whether the following statement is true or false.

Inclusion of value of intermediate goods leads to double counting.

Options

  • True

  • False

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Solution

 Inclusion of value of intermediate goods leads to double counting. - True
Explanation:
The above statement is correct. Inclusion of the value of intermediate goods leads to double counting as the value of intermediate goods is already reflected in the value of the final goods. Thus, if the value of intermediate goods is also included in the calculation of income, then it would mean that their value is included twice, first as their own value and second as a part of value of final goods. Thus, to avoid this problem only the value of final goods and services is included in the estimation of national income.

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 3.2 | Page 79
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