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An auto insurance company increases its average annual premium from $1,000 to $1,100. At the same time, it adds a new 'free roadside assistance' benefit to the policy, which government economists independently value at $60. How should the total $100 increase in the premium be broken down when measuring the change in the nation's real economic output?
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Analyzing Insurance Premium Changes and Real Output
An auto insurance company increases its average annual premium from $1,000 to $1,100. At the same time, it adds a new 'free roadside assistance' benefit to the policy, which government economists independently value at $60. How should the total $100 increase in the premium be broken down when measuring the change in the nation's real economic output?