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Questions
State with reason, whether you agree or disagree with the following statement:
Under the output method, the value-added approach is used to avoid double counting.
State with reason whether you agree or disagree with the following statement:
The value-added approach is used under the output method to avoid double counting.
Options
Agree
Disagree
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Solution
I agree with the above statement.
Reason:
- Double counting occurs when the costs of intermediate goods used by a business to produce finished good are included in the computation of a nation's GDP.
- According to the value-added approach, value-added at each stage of the production process is included while calculating national income.
- Value-added = Value of final output - Value of input.
- GNP is obtained by adding the values added by the different stages of the production process till the final output is reached in the hands of consumers.
- The calculation in such a manner ensures that the costs of all intermediate goods are counted only once.
RELATED QUESTIONS
Complete the correlation.
Output method : Product method :: ______ : Factor cost method.
The output method is used to measure National Income by calculating the value of which items?
Which formula expresses Value Added?
Which formula gives GDP by the Value Added Method?
GDP is equal to the sum of which quantity over all firms in the economy?
Which statement correctly distinguishes Gross Value Added from Net Value Added?
In \[\mathrm{GVA}_{i}\equiv Q_{i}-Z_{i}\], what does \[Q_i\] represent?
In \[\mathrm{GVA}_{i}\equiv Q_{i}-Z_{i}\], what does \[Z_i\] represent?
In \[\mathrm{GVA}_{i}\equiv V_{i}+A_{i}-Z_{i}\], what does \[V_i\] represent?
In \[\mathrm{GVA}_{i}\equiv V_{i}+A_{i}-Z_{i}\], what does \[A_i\] represent?
What are inventories?
What is a negative change in inventories called?
Changes in inventories can be which of the following?
Which adjustment is required while using the output method in relation to taxes and subsidies?
Which factor must be accounted for to distinguish changes in value caused by prices?
How are exports and imports treated while using the output method?
Which item must be accounted for when moving from Gross Value Added toward Net Value Added?
Why are second-hand goods excluded from the output method?
Why are inventories included in GVA?
Which two approaches yield the same result for avoiding double counting?
