The obvious answer, then, is to use the market value of production as the measure.
But that leads on to two other problems:
- The problem of inflation
- We have found in economic history that the purchasing power of the monetary unit
varies over time. Inflation is an example of this. If the market value of output
is bigger now than it was ten years ago, how can we be sure whether it is "really"
bigger or is simply being sold at a higher price tag?
- The problem of double-counting
- We want to be sure that each item produced is counted just once. In a complex
modern economy, this may be more difficult than it might appear.
We will take up double-counting first, and return to the problem of inflation
later in this chapter.
