Macro-Economics for Dummies

Not my own - had got it in one of the mails sometime back (have also edited it a bit):

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....suppose you, as a successful capitalist... hire 100 guys to make 100 widgets, and sell the widgets for $1 apiece, and thus GDP is $100.

So far, so good. Then a few days pass, and...

we find that you raised the price to $2, and you also figured out a way to make widgets with only 50 employees! The hike in price, unfortunately, reduces widget sales by 25%.

But GDP jumps to $150!

But because you fired half the employees, labor costs plummeted, and the next thing you know someone jumps on an airplane and flies down to visit your factory and give you an award as Proud Poobah of Productivity, which you deserve because productivity has soared.

In the old days, it took 100 guys to make 100 widgets. Now it takes only fifty guys to make seventy-five widgets, and you doubled the price to more than make up for it.

You're a genius!

But unemployment is up by 50%, total sales volume is down, and inflation has soared to 100%.