Explain any three precautions while calculating GDP by Value Added Method.
Answers
Precautions while using Value added method :-
- Value of intermediate goods :-
→ When we calculate the national income we do not include the value of intermediate goods because their value is reflected in the final goods only .
- Second hand goods
→ Value of second hand good is not listed in the national income because their value has already been accounted in earlier years .
- Services for self consumption
→ Value of services which are made for self consumption are not estimated because it is not possible to estimate their value.
Hence these are the three precautions regarding value added method.
Answer:
Precautions while using Value added method :-
Value of intermediate goods :-
→ When we calculate the national income we do not include the value of intermediate goods because their value is reflected in the final goods only .
Second hand goods
→ Value of second hand good is not listed in the national income because their value has already been accounted in earlier years .
Services for self consumption
→ Value of services which are made for self consumption are not estimated because it is not possible to estimate their value.
Hence these are the three precautions regarding value added method.
Explanation:
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