In case, value of intermediate goods are included during the estimation of national product, which problem will arise ?
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : Problem of Double counting
Including intermediate goods would lead to double counting, where the value of goods is counted multiple times in the GDP calculation process. This overestimates the true value added in production and distorts the accuracy of the GDP figure as a measure of economic output.