Question

What is double counting of national income?

Answer 1

Double counting in accounting is an error whereby a transaction is counted more than once, for whatever reason. But in social accounting it also refers to a conceptual problem in social accounting practice, when the attempt is made to estimate the new value added by Gross Output, or the value of total investments.

Answer 2

Answer:

Double counting is the issue that occurs while calculating the Gross Domestic Product. (GDP).

• Double counting involves more than once counting the price of the same item or expenditure. In this way, several products are counted more than once, resulting in overestimation of the national product to the degree of the price of the included intermediate goods.
• The cost of only final goods and services is included when calculating the national income. Nevertheless, when the price of intermediate goods is also included along with the value of final goods, the problem of double counting occurs. Thus, double counting means more than once counting an item in the cycle of different production stages.