Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

In case, value of intermediate goods are included during the estimation of national product, which problem will arise ?

Options:

Problem of Double counting

Problem of Inclusion

Problem of Scarcity

Problem of estimation of National Income

Correct Answer:

Problem of Double counting

Explanation:

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.