Expenditures Approach to Calculating GDP

Running head: ECONOMICS
Economics
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1ECONOMICS
Table of Contents
Part 1: Expenditures Approach to Calculating GDP..................................................................2
1. a) Presentation of table.......................................................................................................2
1. b ) Proportion of each category in nominal and real GDP.................................................2
2. Result Analysis...................................................................................................................3
Part 2: Income Approach to Calculating GDP...........................................................................5
1. Presentation of table...........................................................................................................5
2. Result analysis....................................................................................................................5
Part 3: GDP in Different Countries............................................................................................7
Presentation of table...............................................................................................................7
Result Analysis.......................................................................................................................7
Part 4: Index of Economic Freedom..........................................................................................9
Presentation of table...............................................................................................................9
Result analysis......................................................................................................................10
References list..........................................................................................................................12

2ECONOMICS
Part 1: Expenditures Approach to Calculating GDP
1. a) Presentation of table
Table 1: Nominal GDP and its different components
Nominal GDP and its components Value
Gross Domestic Product 20658.2
Personal consumption expenditures 14050.5
Gross private domestic investment 3710.7
Net exports of goods and services -653.5
Government consumption expenditures and gross
investment 3550.5
Table 2: Real GDP and its different components
Real GDP and its components Value
Gross Domestic Product 18665
Personal consumption expenditures 12953.3
Gross private domestic investment 3436.2
Net exports of goods and services -949.7
Government consumption expenditures and gross
investment 3192
1. b ) Proportion of each category in nominal and real GDP
Table 3: Proportion of different components in Nominal GDP
Nominal GDP and its components Value
Percentage share of
GDP
Gross Domestic Product 20658.2
Personal consumption expenditures 14050.5 68.01
Gross private domestic investment 3710.7 17.96
Net exports of goods and services -653.5 -3.16
Government consumption expenditures and gross
investment 3550.5 17.19

3ECONOMICS
Table 4: Proportion of different components in Real GDP
Real GDP and its components Value Percentage share of GDP
Gross Domestic Product 18665
Personal consumption expenditures 12953.3 69.40
Gross private domestic investment 3436.2 18.41
Net exports of goods and services -949.7 -5.09
Government consumption expenditures and gross
investment 3192 17.10
2. Result Analysis
Introduction
Gross Domestic Products of a nation is the simplest measure of capturing the
aggregate output of a nation. The most common approach in computing GDP is the
expenditure approach where expenditures on various component such as personal
consumption expenditure, investment expenditure, government spending, net export of goods
and services are add up to estimate GDP1. The report analyzes nominal and real GDP and
proportionate share of various components in United State for the last quarter.
Analysis
As Gross Domestic Product gives the economic value of produced goods and
services, market price of produced goods and services is required to estimate the value of
aggregate output. When GDP is computed at the current year market price, it is known as
nominal GDP. Computed GDP with the use of market price of a fixed base year is called real
GDP. In other words, real GDP provides the inflation adjusted measure aggregate output. For
US, nominal GDP for the last quarter is 20658.2 billion dollar. The obtained value of real
GDP is 18665 billion dollars. The nominal GDP thus is higher than real GDP. More
1 Goodwin, N., Harris, J. M., Nelson, J. A., Roach, B., & Torras, M. (2015). Macroeconomics in context.
Routledge.