To calculate national income overall value of goods and services produced by the country is taken into account. However, this method suffers from ‘double counting’, since the output of a production unit can be the input for another unit, it leads to double counting of a single variable. Only final goods are included when measuring national income. If intermediate goods were included too, this would lead to double counting;
For example: the value of the tires would be counted once when they are sold to the car manufacturer, and again when the car is sold to the consumer.