skeeter,
You have to be careful when you just think in terms of dollars.
If a car costs me 15K and then because of inflation, the same exact car costs 30K, Nominal GDP has gone up, but Real GDP has not.
If a car costs me 15K, and then because of productivity gains a better car costs me 15K, Nominal GDP is the same, but REAL GDP or standards of living are higher.
Recent experience is that GDP goes up in dollar terms because of productivity, population increase, and "inflation". But living standards are not tied to increases in GDP related to inflation. They are related to productivity.
That's why when we get a better computer for less money today than we did 10 years ago, we get credit for it in REAL GDP. It IS an increase in standard of living. The problem is when they add phony guesstimate DOLLARS to GDP because of quality improvements. IMO, that's not really correct. But somehow, we have to capture the fact that standards of living have improved because of better and cheaper computers. I just don't have the expertise to know how to do that correctly (and neither does the government) LOL |
