To overcome the problem of double counting under the expenditure approach,

Analyze the question

Double counting means counting the same output more than once when calculating national income. The question asks how to avoid it under the expenditure approach, which measures national income by adding up total spending on goods and services in the economy.

Explain the concept

Take a loaf of bread sold for ₦500:

• The farmer sells wheat to the miller for ₦100.
• The miller sells flour to the baker for ₦250.
• The baker sells bread to the consumer for ₦500.

If we add all the transactions (100 + 250 + 500 = ₦850), we count the wheat and flour twice, because their values are already included in the price of the bread. The real value of output is only ₦500.

Solution: checking each option

• A. Counting spending on intermediate goods is exactly what causes double counting, so this is wrong.
• B. The value-added method does avoid double counting, but it belongs to the output (production) approach, not the expenditure approach. So it doesn't fit the question.
• C. Accounting standards do not address the problem of double counting, so this is wrong.
• D. Counting only spending on final goods and services (C + I + G + (X − M)) leaves out intermediate goods, so each item is counted only once. This is correct.

Answer: Option D. Under the expenditure approach, only final goods and services are included in GDP, so double counting is avoided.

Exam tip: Remember the pairing:

• Expenditure approach → final goods only
• Output approach → value added

If the question names the method, match the fix to that method.