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+1 vote
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in Economics by (71.8k points)

What is meant by problem of double counting? How this problem can be avoided? 

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The problem of double counting arises when the value of certain goods and services are counted more than once while estimating National Income by Value Added Method. This happens when the value of intermediate goods is counted in the estimation of National Income alongwith the final value of goods and services. Two methods to avoid the problem of double counting: 

i. To consider only the final value of output produced. 

ii. To consider only the value added of the output produced.

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