2. Problem of Double Counting
“Counting the value of a product
more than once in the measurement
or estimation of national income is
called double counting”
3. To avoid double counting, Two
methods are adopeted.
1. Final Product Method
2. Value Added Method
4. 1. Final Product Method
According to this method ,
value of “only final goods”
and services are to be considered
while estimating the GDP
5. 2. Value Added Method
According to this method,
sum total of value added by each
firm should be taken while
estimating GDP
6. Estimating Value Addition
Enterprise Output Value of
Output
( ₹ )
Intermediate
consumption
( ₹ )
Value Added
( ₹ )
Farmer Wheat 500 200 300
Mill Flour 1000 500 500
Baker Bread 1500 1000 500
Total 3000 1700 1300
in the table, the gross value added by all the producing enterprises is
Value Added Method:- ₹ 300 + ₹ 500 + ₹ 500 = ₹1300
Final Product Method:- ₹ 1500
