Question
What precautions should be taken while estimating national income by value added method? Explain.

Answer

  1. Production for self-consumption should be included because it is production activity.
  2. Only final goods should be included to avoid double counting.
  3. Sale of old goods should not be included because they were counted in production. When produced new.

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Similar questions

Given the following data, find the missing values of ‘Private Final Consumption Expenditure’ and ‘Operating surplus’.
S.No.
Particulars
Amount
(In $₹$ crores$)$
$(i)$
National Income
$50,000$
$(ii)$
Net Indirect Taxes
$1,000$
$(iii)$
Private Final Consumption Expenditure
$?$
$(iv)$
Gross Domestic Capital Formation
$17,000$
$(v)$
Profits
$1,000$
$(vi)$
Government Final Consumption Expenditure
$12,500$
$(vii)$
Wages & Salaries
$20,000$
$(viii)$
Consumption of Fixed Capital
$700$
$(ix)$
Mixed Income of Self Employed
$13,000$
$(x)$
Operating Surplus
$?$
$(xi)$
Net Factor Income from Abroad
$500$
$(xii)$
Net Exports
$2,000$
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