Why are the intermediate goods NOT included in the National Income?

The correct option is: For the prevention of double accounting.

Let us break down why intermediate goods are excluded from the calculation of National Income:
National Income is designed to measure the total value of all final goods and services produced within a country during a specific period.

1. Understanding Intermediate vs. Final Goods:
- Intermediate Goods: These are goods that are used as inputs in the production of other goods and services. For example, flour used by a baker to make bread, or steel used by a car manufacturer to build a car.
- Final Goods: These are the finished products that reach the final consumer for consumption or investment, such as the bread bought by a household or the car bought by a buyer.

2. The Problem of Double Accounting (Double Counting):
The value of intermediate goods is already included in the market price of the final goods. For instance, the price of a loaf of bread ($2.00) already covers the cost of the flour ($0.50) that was used to bake it.
If we were to count both the flour ($0.50) and the loaf of bread ($2.00) in the National Income, the value of the flour would be counted twice. This error is known as double accounting or double counting, which artificially inflates the estimation of National Income.

Therefore, to prevent double accounting and ensure an accurate measurement of economic output, only the value of final goods and services is included in the National Income.