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I believe they may be referring to the idea that not everything is consumed in the year it’s produced. Infrastructure, for example, is useful years or even deca
by matt4077 7y ago
I believe they may be referring to the idea that not everything is consumed in the year it’s produced. Infrastructure, for example, is useful years or even decades after it is built (and, presumably, counted in GDP).
- abdullahkhalids 7y agoTo make it concrete, if there are two people in the economy: Alice and Bob. The only products that are exchanged is clothes and shoes. Every year, Alice sells 100 Galleons of shoes to Bob and Bob sells 100 Galleons of clothes to Alice. So the GDP of their economy is 200 Galleons. But assuming that shoes and clothes don't decay in one year, Alice and Bob will become wealthier and wealthier in apparel every year.
- tonyedgecombe 7y agoThey will still earn the same number of Galleons each year though, so GDP stays the same.
- pjc50 7y agoPerhaps surprisingly, neither capital stock nor asset price inflation is counted.