BEA estimates the nations 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 quarters end, is an early look based on the best information available at that time. The second and third estimates incorporate additional source data that were not available the month before, improving accuracy.( www.bea.gov (Links to an external site.)).
BEA publishes estimates of levels at annual rates (for most series) for ease of comparison 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 BEAs 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 (Links to an external site.)).
Complete the following exercise
Visit the Bureau of Economic Analysis website at www.bea.gov (Links to an external site.). 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).
Create the table that contains the following information for the last available quarter.
You need this information from both parts of table 3- (nominal GDP (and its components) from the 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 website.
Gross domestic product
Personal consumption expenditures
Gross private domestic investment
Net exports of goods and services
Government consumption expenditures and gross investment
b) Calculate the percentage (the proportion) of each category in nominal GDP and in real GDP. Please use the EXCEL® spreadsheet provided by Professor to do these calculations. It is posted in Canvas. You can just copy and paste the table from EXCEL into your paper
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 pr
ivate 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.
Write a brief report which contains an analysis of the results you received.
In this report consider, but do not be limited to the following:
Why was the nominal GDP greater than the real GDP? By how much?
GDP is composed of several categories. What category makes up the largest portion of GDP? What category makes up the smallest portion of GDP?
What is Gross private domestic investment? What does gross private domestic investment measure?
What is Net exports of goods and services? Why it is negative?
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.
Reflect on what you have learned from this exercise in a few sentences.
Part 2: Income Approach to Calculating GDP (weight 45% of the assignment grade)
Complete the following exercise:
Go to http://www.bea.gov/ (Links to an external site.)
Visit the Bureau of Economic Analysis website at www.bea.gov (Links to an external site.). 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).
Create the table that contains the following information for the last quarter where data required for this exercise is available.
Omit the intermediate lines found in Tables 7 and 8 on the website.
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
Present the information that you received in your project.
Write a report which contains responses to the following countries:
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?
What calculations must you make to determine GNP from GDP based on the table?
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 several categories. What category makes up the largest portion of NI?
Reflect on what you have learned from this exercise in a few sentences.