The problem of double counting is the problem of estimating the value of goods and services more than once.
For example:- A farmer produces 100 kg of wheat and sells it for Rs.4000 to Miller.
For Miller, wheat is an intermediate good. Miller converts wheat into flour. He sells it for Rs.5000 to a baker.
Baker manufactures bread from flour and sells the entire bread to final consumers for Rs.6000.
As a general practice , every producer treats its product as final output. Total value of output=4000+5000+6000=15000.But the value of wheat and flour are counted more than once.
The problem of double counting can be avoided by (i) Final output method and (ii) Value added Method.
