Question

Highlight Year, GDP and Consumption expenditure data including labels. Select Insert, and from Charts option, select line chart. On horizonatal axis, you should see, Years, plus GDP and Consumption expenditure trend lines AS you can see, GDP and Consumption lines lie practically on top of each other from 1929 through early 1960s before diverging. Write a short paragraph explaining why GDP (a measure of output) exceeded Consumption starting 1960s. What happened to the economy in early 60's that brought about divergence of output and consumption?

Nominal Gross Domestic Product and Personal Consumption Expenditure in $billions 1929-2016
Source: Federal Reserve Bank of St. Louis
Year	Personal Consumption Expenditure	Nominal GDP
1929-01-01	77.4	104.6
1930-01-01	70.1	92.2
1931-01-01	60.7	77.4
1932-01-01	48.7	59.5
1933-01-01	45.9	57.2
1934-01-01	51.5	66.8
1935-01-01	55.9	74.3
1936-01-01	62.2	84.9
1937-01-01	66.8	93.0
1938-01-01	64.3	87.4
1939-01-01	67.2	93.5
1940-01-01	71.3	102.9
1941-01-01	81.1	129.4
1942-01-01	89.0	166.0
1943-01-01	99.9	203.1
1944-01-01	108.6	224.6
1945-01-01	120.0	228.2
1946-01-01	144.3	227.8
1947-01-01	162.0	249.9
1948-01-01	175.0	274.8
1949-01-01	178.5	272.8
1950-01-01	192.2	300.2
1951-01-01	208.5	347.3
1952-01-01	219.5	367.7
1953-01-01	233.0	389.7
1954-01-01	239.9	391.1
1955-01-01	258.7	426.2
1956-01-01	271.6	450.1
1957-01-01	286.7	474.9
1958-01-01	296.0	482.0
1959-01-01	317.5	522.5
1960-01-01	331.6	543.3
1961-01-01	342.0	563.3
1962-01-01	363.1	605.1
1963-01-01	382.5	638.6
1964-01-01	411.2	685.8
1965-01-01	443.6	743.7
1966-01-01	480.6	815.0
1967-01-01	507.4	861.7
1968-01-01	557.4	942.5
1969-01-01	604.5	1019.9
1970-01-01	647.7	1075.9
1971-01-01	701.0	1167.8
1972-01-01	769.4	1282.4
1973-01-01	851.1	1428.5
1974-01-01	932.0	1548.8
1975-01-01	1032.8	1688.9
1976-01-01	1150.2	1877.6
1977-01-01	1276.7	2086.0
1978-01-01	1426.2	2356.6
1979-01-01	1589.5	2632.1
1980-01-01	1754.6	2862.5
1981-01-01	1937.5	3211.0
1982-01-01	2073.9	3345.0
1983-01-01	2286.5	3638.1
1984-01-01	2498.2	4040.7
1985-01-01	2722.7	4346.7
1986-01-01	2898.4	4590.2
1987-01-01	3092.1	4870.2
1988-01-01	3346.9	5252.6
1989-01-01	3592.8	5657.7
1990-01-01	3825.6	5979.6
1991-01-01	3960.2	6174.0
1992-01-01	4215.7	6539.3
1993-01-01	4471.0	6878.7
1994-01-01	4741.0	7308.8
1995-01-01	4984.2	7664.1
1996-01-01	5268.1	8100.2
1997-01-01	5560.7	8608.5
1998-01-01	5903.0	9089.2
1999-01-01	6307.0	9660.6
2000-01-01	6792.4	10284.8
2001-01-01	7103.1	10621.8
2002-01-01	7384.1	10977.5
2003-01-01	7765.5	11510.7
2004-01-01	8260.0	12274.9
2005-01-01	8794.1	13093.7
2006-01-01	9304.0	13855.9
2007-01-01	9750.5	14477.6
2008-01-01	10013.6	14718.6
2009-01-01	9847.0	14418.7
2010-01-01	10202.2	14964.4
2011-01-01	10689.3	15517.9
2012-01-01	11050.6	16155.3
2013-01-01	11361.2	16691.5
2014-01-01	11863.4	17393.1
2015-01-01	12283.7	18036.6
2016-01-01	12757.9	18569.1

Answer 1

Answer - The line chart has been drawn from given data. Time (In year) has been shown on horizontal axis and nominal gdp and personal consumption expenditure has been shown on vertical axis. In the line chart nominal gdp and personal consumption are moving with same speed. Consumption and nominal gdp are approx equal till 1960’s. After 1960 we saw that nominal gdp rise faster than personal consumption expenditure. In the diagram, blue line shows personal consumption expenditure below to the nominal gdp line (Red line).  

International trade started rising, technological advancement take place in the manufacturing sector which increased production in the countries. Nominal gdp rose grew more because of price rise also. In1973, oil crisis increased inflation into the economy. People were consuming less. Their MPC was lower in these years.