In the value added method, we subtract the intermediate consumption from total value to avoid the problem of:

Including factor cost

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Exclusion of incomes from abroad

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Double counting

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Indirect tax miscalculation

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Solution

The correct option is C
Double counting

In order to avoid double counting, we subtract the intermediate consumption from total value.

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Similar questions

(a) From the following data compute net value added at factor cost:

$\begin{matrix} Items & Domestic sales & Subsidies & Purchase of raw material & Exports & Depreciation & Import of & Net in domestic market & indirect taxes In Crores & 2500 & 40 & 500 & 200 & 100 & 600 & 60 \end{matrix}$

(b) Intermediate goods and corporate tax are included in national income indirectly. How ?

Calculate $G N P_{m p}$

(a) By Income Method

(b) Expenditure Method

$\begin{matrix} (a) & Rent & 40 (b) & Private Final Consumption Expenditure & 800 (c) & Net Exports & 20 (d) & Interest & 60 (e) & Profit & 120 (f) & Government Final Consumption Expenditure & 200 (g) & Net Domestic Capital Formation & 100 (h) & Compensation of Employees & 800 (i) & Depreciation & 20 (j) & Net Indirect Taxes & 100 (k) & Net Factors Income From Abroad & (-) 20 \end{matrix}$

Q. Calculate Indirect Taxes from the following data:

Particulars	Rs. in crores
(i) NDP at FC (ii) Subsidies (iii) Factor income from abroad (iv) Consumption of Fixed Capital (v) Factor income to abroad (vi) GNP at MP	55,915 1,540 635 1,625 865 58,350

Q. Calculate (a) Domestic Income; (b) National Income

Particulars	Rs. in crores
(i) GDP at MP (ii) Indirect Taxes (iii) Factor income from abroad (iv) Consumption of Fixed Capital (v) Factor income to abroad (vi) Subsidies	70,150 5,200 800 3,100 300 4,000

Q. State whether the following statements are true or false.

1) National income is computed every year.
2) Inclusion of value of intermediate goods leads to double counting.
3) GDP includes net income from abroad.
4) Financial year in India is leap year.
5) Services of housewives are included in national income.

Q. Calculate GDP at MP:

Particulars	Rs. in crores
(i) National Income (ii) Consumption of Fixed Capital (iii) Factor income from abroad (iv) Indirect Taxes (v) Subsidies (vi) Factor income to abroad	6,700 180 100 130 70 150

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In the value added method, we subtract the intermediate consumption from total value to avoid the problem of:

The correct option is C Double counting In order to avoid double counting, we subtract the intermediate consumption from total value.

The correct option is C
Double counting

In order to avoid double counting, we subtract the intermediate consumption from total value.