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Analyzing Insurance Premium Changes and Real Output
An auto insurance company increases its standard annual premium by $100. Compare how national statisticians should treat this $100 increase when calculating real economic output under two different scenarios: a) The increase is solely due to rising administrative costs for the insurer. b) The increase is solely because the policy now includes a new benefit, such as comprehensive glass coverage, that was not previously offered.
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Suppose the average price for a standard health insurance policy in a country increases by 8% in one year. Economic statisticians determine that this increase is entirely because the policy now includes coverage for a wider range of preventative care services. How should this 8% increase be primarily recorded when calculating the change in the nation's real economic output?
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?