Part 1: Expenditures Approach to Calculating GDP (weight 45% of the assignment  grade)

BEA estimates the nation’s GDP for each year and each quarter. But new GDP  statistics are released every month. Why? Because for each quarter, BEA  estimates GDP three times. The advance estimate, coming about a month after  the quarter’s end, is an early look based on the best information available at that  time. The second estimate and third estimate each incorporate additional  source data that weren’t available the month before, improving accuracy.(  www.bea.gov).

BEA publishes estimates of levels at annual rates (for most series) for ease of  comparisons with related and historical data. For example, in its February 2,  2004 personal income and outlays release, BEA estimated that personal income  for December 2003 was \$9,335.8 billion at an annual rate. This is easily

compared to BEA’s estimates of personal income for the fourth quarter of 2003  (\$9,312.6 billion, at an annual rate) and for the entire year of 2003 (\$9,187.4  billion).(www.bea.gov).

Published

January 13, 2006

Complete the following exercise

Visit the Bureau of Economic Analysis website at www.bea.gov. From the drop-down  menu under “Data”, click on “by Economics Account”.

Then click on “National”> “Gross Domestic Product > and “Full Release and Tables”.

(To find “Full Release and Tables” you need to scroll down the page to the section

“Current Release”.

Use table 3 (Gross Domestic Product: Level and Change from Preceding Period).

Tables are located at the end of the Release, so you need to scroll all the way down to  the tables.

The left columns are nominal GDP (and its components) and the right half represents  real GDP (chained 2012 dollars).

1. Create the table that contains the following information for the most recent  quarter where data required for this exercise is available. Please note that using the data for previous years and/or  previous estimates will produce grade zero for this part of the project.

You need this information from both parts of the table 3- (nominal GDP (and its  components) from left columns and real GDP (chained 2012 dollars) from the  right part of the table 3). Omit the intermediate lines found in Table 3 on the web  site.

Gross domestic product

Personal consumption expenditures

Gross private domestic investment

Net exports of goods and services

Government consumption expenditures and gross investment

• Calculate the percentage (the proportion) of each category in nominal  GDP and in real GDP.

Using Nominal GDP:

[Personal consumption expenditures / Nominal GDP]*100%

[Gross private domestic investment / Nominal GDP]*100%

[Net exports of goods and services / Nominal GDP]*100%

[Government consumption expenditures and gross investment/ Nominal  GDP]*100%

And using Real GDP:

[Personal consumption expenditures / Real GDP]*100%

[Gross private domestic investment / Real]*100%

[Net exports of goods and services / Real GDP]*100%

[Government consumption expenditures and gross investment/ Real

GDP]*100% Present the information that you received (a) and (b) as a table(s) in your project.

2. Write a report (2 pages double – spaced), which contains an analysis of  the results you received.

In this report consider, but do not be limited to the following:

1. Why was the nominal GDP greater than the real GDP? By how much? 2. GDP is composed of a number of categories. What category makes up the  largest portion of GDP? What category makes up the smallest portion of GDP? 3. What is “Gross private domestic investment”? What does gross private domestic  investment measure?

4. What is “Net exports of goods and services”? Why it is negative? 5. In the left part of the table 3 (nominal GDP) find the category “National defense”.  How much was the National defense for the last quarter? Calculate percentage  of National defense out of “Government consumption expenditures and gross  investment”. Calculate percentage of National defense out of GDP. 6. Please analyze and discuss the significance of the data that you received  for this Data exercise.

7. Reflect on what you have learned from this exercise.

Part 2: Income Approach to Calculating GDP (weight 45% of the assignment  grade)

Complete the following exercise

Go to http://www.bea.gov/

Visit the Bureau of Economic Analysis website at www.bea.gov. From the drop down menu under “Data”, click on “by Economics Account”. Then click on

“National”, “Gross Domestic Product, and “Full Release and Tables”. Use table 7  (Relation of Gross Domestic Product, Gross National Product, and National  Income) and table 8 (Personal Income and its Disposition).

1. Create the table that contains the following information for the most recent quarter where data required for this exercise is available

Please note that using the data for previous years and/or previous  estimates will produce grade zero for this part of the project.

Omit the intermediate lines found in Tables 7 and 8 on the web site.

Gross domestic product

Gross national product

Net national product (you should calculate it as Gross national product minus  Consumption of fixed capital)

National income

Personal income

Personal Disposable Income

Personal Savings

2. Write a report in your own words (2 pages, double-spaced), which contains the  analysis of the results you received. In this report consider, but do not be limited  to the following:

1. What is the difference between gross domestic product (GDP) and gross national  product (GNP)? What is the difference in what GDP measures compared to  GNP?
2. Based on the table, what calculations must you make to determine GNP from

GDP?

• What is national income (NI)? What does NI measure?
• Which was higher in this year, GNP or NI? By how much?
• What calculations must you make to determine NI from GNP?
• NI is composed of a number of categories. What category makes up the largest  portion of NI?
• What calculations must you make to determine Personal Income from National  Income?
• What calculations must you make to determine Personal Disposable Income and  Personal Savings?
• Please analyze and discuss the significance of the data that you received  for this Data exercise.
• Reflect on what you have learned from this exercise.

PRESENTATION OF THE DATA EXERCISE AND USE OF APA CITATION  METHODOLOGY (10%) of the project grade):

∙ Organization, format, and presentation of paper including the title page,  introduction, body, and summary. Begin each section with a subheading; use the  subheadings described in the assignment (3% of the project grade).

∙ Use of tables, figures, and other graphics to summarize and support analysis  presented in the paper. All tables and charts should have the numbering system:  “Table 1”, a substantive title, and a reference to the source of the information.  (3% of the project grade).

∙ Research sources and significance of research information and data, and use of  APA citation methodology (4% of the project grade).

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