Retail sales refer to the sum total of all receipts that go to those who sell merchandise and other consumer goods. Retail sales cover a wide range of consumer goods, both durable and non-durable. Economists monitor retail sales because they are primary indicators of trends in consumer expenditures over time. In the U.S., for example, retail sales account for approximately half of the total expenditure by consumers (Krugman, 2009). In addition, it can be used in planning for output as it gives an indication of which products the citizens’ demand more.
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Online trading has a number of difficulties as far as the measurement of economic activity is concerned. First, products that can be delivered online, such as computer programs and updates are difficult to classify as either exports or imports and are usually recorded (Deepeshree & Agarwal, 2006). An individual in Australia can buy software in Germany online without the knowledge of the relevant authorities. Similarly, retail prices indicated online exclude freight costs, and it may be difficult to know the actual price paid by the consumer. In addition, since the individual retailers have access to the online trading database, they can engage in malpractices such as tax evasion and tax avoidance by giving incorrect information.
Deepeshree, S. & Agarwal, V. (2006). Macroeconomics. New York, NY: McGraw-Hill.
Krugman, P. (2009). Macroeconomics. New York, NY: Worth Publishers.