Economic Awareness - Sectors of Indian Economy
In the Value Added Approach, which of the following is subtracted from the value of output to calculate value added?
In the Value Added Approach, which of the following is subtracted from the value of output to calculate value added?
easy Q2 of 15
Step-by-Step Solution
Step 1: Recall the formula for value added
Value added = Value of output minus value of intermediate goods consumed.Step 2: Identify correct subtraction
Value of intermediate goods consumed is subtracted to avoid counting inputs multiple times. Final goods, government expenditure, and capital goods are not subtracted in this way.Final Answer:
Value of intermediate goods consumed → Option DQuick Check:
Value Added = Output minus Intermediate Goods Consumed ✅
Quick Trick: Subtract intermediate goods value from output to get value added.
Common Mistakes:
- Mistaking capital goods or final goods as intermediate goods.
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