Question
Under output method, value added approach is used to avoid double counting.
✓
Answer
Yes, I agree with this statement.
- The value added approach is the difference between the value of final output and input at each stage of production.
- In this approach, the value added at each stage of production is considered.
- E.g.
- In the above example, value of groundnut with shell is ₹ 50, after removing shells value of groundnut is ₹ 80, after crushing groundnut value oil ₹ 120 and when oil is packed its value ₹ 150.
- So, the value added raw groundnut (₹ 50), groundnut (₹ 30), oil (₹ 40), packed oil (₹ 30), total value ₹ 150 is included in national income.
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