In: Economics
Exhibit: Totals Recorded for the United States (billions of dollars)*
Durable goods consumption $ 497
Nondurable goods consumption 1,301
Services consumption 2,342
Business fixed investment 566
Residential fixed investment 224
Inventory investment 7
Federal government purchases 449
State and local government purchases 683
Exports 640
Imports 670
Excess of GNP over GDP 7
Depreciation 658
Indirect business taxes 551
Corporate profits (includes wage accruals less disbursements) 387
Social insurance contributions 556
Net interest 442
Dividends (includes business transfer payments) 162
Government transfers to individuals 837
Personal interest income 694
Personal tax and nontax payments 645
What were the approximate ratios of consumption, investment, and government purchases to GDP?
Calculate consumption -
Consumption = Durable goods consumption + Non durable goods consumption + Services consumption
Consumption = 497 + 1301 + 2342 = 4140
The consumption is $4,140 billion.
Calculate investment -
Investment = Business fixed investment + residential fixed investment + Inventory investment
Investment = 566 + 224 + 7 = 797
The investment is $797 billion.
Calculate government purchases -
Government purchases = Federal government purchases + State and local government purchases
Government purchases = 449 + 683 = 1,132
The government purchases is $1,132 billion
Calculate net exports -
Net exports = Exports - Imports
Net exports = 640 - 670 = -30
The net exports is -$30 billion.
Calculate GDP -
GDP = Consumption + Investment + Government purchases + Net exports
GDP = $4,140 billion + $797 billion + $1,132 billion - $30 billion
GDP = $6,039 billion
The GDP is $6,039 billion.
Calculate the ratio of consumption to GDP -
Ratio = Consumption/GDP
Ratio = $4,140 billion/$6.039 billion
Ratio = 0.68
The ratio of consumption to GDP is 0.68
Calculate the ratio of investment to GDP -
Ratio = Investment/GDP
Ratio = $797 billion/$6.039 billion
Ratio = 0.13
The ratio of investment to GDP is 0.13
Calculate the ratio of government purchases to GDP -
Ratio = Government purchases/GDP
Ratio = $1,132 billion/$6.039 billion
Ratio = 0.19
The ratio of government purchases to GDP is 0.19