NABTEB Economics 2013 Theory — Question 16

Model answer

(i) Problem of double counting: intermediate expenditures are most often included, leading to double-counting and overestimation of the national income figure. (ii) Inadequate statistical data: due to a large informal sector, e.g. self-employed people and subsistence production, accurate data is hard to obtain. (iii) Difficulty in measuring value of imports and exports: many payments do not pass through official channels and are therefore difficult to estimate. (Other acceptable problems: difficulty measuring capital depreciation, and price fluctuations, which make valuation of goods and services difficult.)