Question

U.S. Bureau of Economic Analysis (BEA) publishes data for GDP with the breakdown of all the components of GDP. Visit their website by clicking on the following link

https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey

Then select Table 1.1.5. Gross Domestic Product, from SECTION 1- Domestic Product.

Using the table answer the following questions:

a. Based on the table, what are the components that are listed as part of the consumption. You do not need to provide the values only names are enough.

b. Based on the table, what are the components that are listed as part of the investment. You do not need to provide the values only names are enough.

c. Among all components of GDP including consumption, government purchase, net exports, and investment, which component changed the most during the first quarter of 2020 compare to the last quarter of 2019.

d. Referring to the data for first quarter of 2020, what percentage of GDP comes from consumption? what percentage of GDP comes from investment? what percentage of GDP comes government purchases? what percentage of GDP is comes from net exports?

Answer 1

Answer a.  Components components that are listed as part of the consumption:

1. Goods includes durables and non durable goods

2. Services.

Private final consumption expenditure refers to expenditure incurred by households and private non-profit institutions serving households on all type of consumer goods such as durable, semi durable, non durable goods and services.

Answer b. Components that are listed as part of the investment

1. Fixed investment - This includes non-residential and residential Investments. Non residential further includes structures, equipments and intellectual properties.

2. Change in inventory.

Gross private domestic investments refer to edition to the capital stock of the economy. it represents the expenditure incurred on acquiring goods for investment by the production units located within the domestic territory. There are two components including fixed investment and inventory investment.

Answer c. Among all the components of GDP including consumption, investment, net exports and government Purchase, private consumption expenditure has changed the most during the first quarter of 2020 compared to the last quarter of 2019. Private consumption expenditure has decreased from 14,795 to 14,583.3. Private consumption expenditure has decreased by 211.7. whereas gross domestic investment has decreased by 69.3, net exports has increased by 53.2, and government consumption expenditure has increased by 38.3.

Answer d. Percentage of GDP from consumption: 14583.3/21539.7 x100 = 67.70%

Percentage of GDP from investment = 3629/21539.7 x 100= 16 84%

Percentage of GDP from net exports= -524.7/21539.7 x 100 = -2.43%

Percentage of GDP from government purchases = 3852/21539.7 x 100 = 17.88%