1. There are 3 kinds of lies:
Weaknesses of Economic Measurements
There are 3 kinds of lies:
lies, damned lies, and statistics
Always think critically about statistics and recognize that there may be biases in the numbers.

3. Weaknesses of Economic Measurements
Goal #1: Price Stability
Goal #2: Economic Growth
Goal #3: Full Employment
Inflation Rate - Overstated
GDP - Understated
Unemployment Rate - Understated
1. Underground economy- black and gray mkt.
1. Shopping at Discount Stores- people pay less than govt. thinks
1. Discouraged workers
not counted as unemployed
2. Undervalues “women’s work” i.e. childcare housekeeping, cooking
2. Lots of underemployed /overqualified workers
2. Substitution- buying more of something when it is on sale
3. undervalues volunteer work, other non-market activities
3. People on disability if not disabled lots would be unemployed
3. ∆ in tech- tech drives prices lower, faster than govt. can keep up
4. undercounts services- hard to measure the value
4. Prison inmates- if out lots would be unemployed
5. Ignores enviro costs of economic growth
5. Older population means more disabled/ discouraged
6. Does not tell about distribution of wealth (GDP per capita is an avg.)
Time lags in measurement for all three