>> If, for example, this year’s model sells for the same dollar price as last year’s but has more features that consumers want, its true price has, in effect, dropped. So government agencies produce statistics showing that output, adjusted for price, has risen.

This is a terrible way to view it. If we pack twice as much on a chip vs last year, did output go up? But price went down by about the same amount. Should we measure output in transistors? Printed die area? Dollar price of chips? Number of man-hours required to produce things? Labor cost?

If Intel spent a bunch of cash on a new fab, made circuits with twice as many transistors, reduced prices on the old model and sold the new ones at the old price, then sold the same number as last year, did "output" really change? If yo u think it did, then I ask if it changed in any way that is meaningful to economic measures - it didn't change GDP, it didn't change cost or amount of labor, it didn't even change the companies profits.