Question

Define the problem of double counting in the computation of national economy. State any two approaches to correct the problem of double counting.

Answer 1

Answer:

Double counting in accounting an error whereby transaction is counted more than once.For example,the costs of intermediate goods used by a business to produced a finish good are included in computation of a nation's gross domestic product.Double counting seriously overstates gross domestic product.

Thereticalley, we may say that thier may be two alternative ways avoiding double counting namely=1)finla product and apporach and 2)value added apporach .According to this method ,instead of taking value of final products, value of added by each firm at each stage of production is included.

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