Abstract
This chapter describes the measuring economic activities. It is important to be able to measure rational economic activity. Economists need this data to test and refute their theories. Government policymakers need it to guide wise policy decisions. Business firms need this information to make smart production and marketing plans. The chapter highlights three measures of economic activity. Gross national product measures market production in current dollars. The gross national product (GNP) can be viewed as income, production, or value-added. The GNP has several flaws, however, and must be used with care. Neither GNP nor real gross national product (RGNP) should be interpreted as a measure of economic welfare or well-being. These statistics measure production and income, but they cannot tell whether people are better or worse off. Per capita RGNP puts RGNP on a human scale. Income and value-added are the same (both equal GNP) but income and value-added taxes (VATs) are different. In any case, the VAT is certainly an economic controversy.
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