The answer is yes because the government

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Unformatted text preview: 100) were produced but not sold. Do these cars get counted in GDP? The answer is yes, because the government statisticians who measure GDP assume that everything that is produced is purchased by someone. For purposes of calculating GDP, the government statisticians assume that the car company “purchased” the 1,100 cars that the car company did not sell. Nigel owns his own sock factory. Last year he produced 100,000 pairs of socks. He sold 80,000 pairs to people. That left 20,000 pairs of socks produced but unsold (as far as Nigel is concerned). Government statisticians view these 20,000 pairs of socks as having been produced by Nigel and as having been “purchased” by Nigel. How many pairs of socks are counted in GDP: 80,000 or 100,000? Answer: 100,000. EXAMPLE: QUESTION: How do government statisti- cians know about the 20,000 pairs of socks in inventory? After all, they would have to know about them in order to count them in GDP. ANSWER: When Nigel produced the 100,000 pairs of socks he had to pay workers to produce them. These w...
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