Discuss the problem of double counting in the estimation of national i

1.	Discuss the problem of double counting in the estimation of national income.
Answer» To calculate national income overall value of goods and services produced by the country is taken into account. However, this method suffers from ‘double counting. ’ Since the output of a production unit can be the input for another unit, it leads to double counting of a single variable. Only final goods are included when measuring national income. If intermediate goods were included too, this would lead to double counting; for example, the value of the tires would be counted once when they are sold to the car manufacturer, and again when the car is sold to the consumer.

Discuss the problem of double counting in the estimation of national income.

Answer»

To calculate national income overall value of goods and services produced by the country is taken into account. However, this method suffers from ‘double counting. ’ Since the output of a production unit can be the input for another unit, it leads to double counting of a single variable.

Only final goods are included when measuring national income. If intermediate goods were included too, this would lead to double counting; for example, the value of the tires would be counted once when they are sold to the car manufacturer, and again when the car is sold to the consumer.

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