What’s it called if I buy something like a sandwich, then consume it, and the net worth of society has now shrunk by 1 sandwich? Versus buying something that keeps its value.

Question

Maybe a better example would be a country getting leveled in a war. All of the money is still there, but now everyone is poor and has no net worth. How does that work?

It seems kind of like losing that amount of money, even though we didn’t?

In: 3475

Answer 1

Economists often talk about “durable goods” (or “hard goods”) on the one hand and “consumable goods” / “soft goods” / “nondurable goods” on the other. Your car is the former (even though it doesn’t quite hold its value), while the sandwich is the latter.