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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:
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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- Winter '14