Question : In the product method for measurement of national income, we need to deduct the value of intermediate goods to ____.
Option 1: analyse factors of production
Option 2: avoid over consumption
Option 3: avoid double counting
Option 4: estimate aggregate value of expenditure
Correct Answer: avoid double counting
Solution : The correct option is to avoid double counting.
In the product method for measuring national income, we need to deduct the value of intermediate goods to avoid double counting . Intermediate goods are those used in the production process and are included in the final product's value. Deducting their value ensures that only the value added at each stage of production is considered, preventing the counting of the same value multiple times in the calculation of national income.
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