I was learning the income method of calculating GDP when I stumbled upon this doubt.
As per the definition given in the book
GDP = GDI (Gross Domestic Income) = Compensation of employees + Gross Operating Surplus + Gross Mixed Income + Taxes less subsidies on production + Taxes less subsidies on products and imports.
My doubt here is as follows:
Gross mixed income encompasses incomes of incorporated businesses (for instance sole proprietorship). However, if we consider one scenario that Mr. X is an employee of XYZ corporation. He gets his compensation as $ \$100.$ He pays $\$50$ for his fever treatment to Dr. Y. Now, as per the above definition, Dr. Y's $ \$50 $ will be added with Mr. X's $ \$100$ leading to double counting of the country's income.
How do we deal with such situations? Any help will be appreciated.