"In the two paragraphs, show that you understand the difference between the expenditure approach and the asset cost income approach."

I would like you to choose one from ~ and do the work like A.

...Under the expenditure approach, one of the factors that influence gross domestic product (GDP) is personal consumption expenditures (PCE). PCEs are a measure of national consumer spending on household goods and services for a certain period of time. Household goods are categorized as the following: durable goods - tangible items that are expected to last for more than a year, such as furniture and vehicles; and nondurable goods - tangible items that tend to last less than a year, such as foods or clothing.

An example of PCE that is likely to decrease GDP in the U.S. during 2020 is shopping malls and restaurants continue to close as COVID-19 cases rapidly increase. This will possibly happen around November-December due to the election and year-end holidays, unless people still strictly follow safety guidelines and put the safety of individuals and community over parties. Back to the example, if shopping malls and restaurants start closing and so people remain in their house, there will be a reduction in PCE as not many people are willing (or think it's necessary right now) to go shopping, buy a car, or grab a meal in a restaurant. You may reason that people can still buy clothes or order food online, that's true; but if people don't do parties or go to school/workplace or going anywhere that they need to dress up, they are less likely to spend money on those things.

A.

As you have mentioned, it is an undeniable fact the G.D.P of U.S will likely to decline if the spread of COVID-19 is not eliminated, but instead it increases. The precautions taken to prevent the growth of the pandemic, such as, the lockdown rule and stay home has led people to stop from going out and this in return causes the biggest component of the G.D.P under the expenditure approach: "personal consumption" to decrease since people are less likely to spend money if they don't go out. Alarmingly, the chances of the upcoming election along with the biggest holidays (Christmas, Thanks giving, and New Year), increasing the COVID-19 cases is high due to massive gatherings of people during those periods. If this prediction turns out to be true, the duration of lockdown will be prolonged and the consequences of this is apparent: The G.D.P of U.S will decrease for 2020. I think you did an awesome job in explaining how one of the components of the Expenditure approach could decrease the G.D.P.

Here, I would like to mention the fact that there are different methods to find out the G.D.P of a country. If we were to use the expenditure approach where G.D.P is measured by the total amount the buyers spent on goods and services produced by the country,we can derive G.D.P by combining the personal consumption expenditures, gross private investment, government consumption and gross investment and net exports. Meanwhile, if we were to use an alternative method: the resource-cost income approach where G.D.P is measured by the total incomes earned by households in a country, we can get this by combining the direct income components such as wages and salaries, self-employment income, rents, interest, and corporate profits as well as the indirect business taxes, depreciation, and net income of foreigners. With any of the approaches that are mentioned above, we can find out the G.D.P of a country. Moreover, by analyzing the factors and components of each approaches, we can also determine the possible scenarios that could influence the G.D.P of a certain country like how we did for the G.D.P of the U.S for 2020.

Gross Domestic Product is the total national income or national output. The Gross Domestic Product is composed of several components that together make up national output. These components include; government expenditure, Consumption, Investment, Exports, and the Imports. During the year 2020, the world economy has been hard hit by the pandemic, which has paralyzed international trade, the United States included. However, the United States economy being an exporter of goods and services to the global market. Therefore, the total exports from the US market have declined to cause a cumulative decline in national output. Also, the demand for goods and services has reduced in the United States economy, which has decreased the consumption component, leading to a decline in national income.

Thus, if consumption declines by a lot and the other factors adding to GDP do not change, the overall GDP can decline in 2020. The Covid-19 pandemic has hit the economy. It has resulted in both a supply and demand shock. As firms cannot produce due to a lack of labor or raw materials, they reduce workers. As such, the unemployment rate in the economy increases by quite a lot. As more and more people lose purchasing power due to reduced incomes, their demand decreases, and the consumption goes down significantly. As a result, GDP can go down despite efforts to compensate for the lack of private expenditure by increased government expenditure.

The formula of"Y=C+I+G+(X-M)" is used to calculate GDP.I focus on the letter "C" which indicates consumption. I think consumption is the best factor to imagine how our lives are related to GDP and to pick some examples to explain how it influences to GDP. "C" equals the amount spent by consumers, so GDP increases as we buy products and get services. Thus, GDP decreases when a big problem which causes us to lose chances to go shopping and to get services happens like this year. As we all have experienced, COVID-19 has prevented us from spending our own usual lives and it will cause more impacts to our lives and GDP.

What I want to use as an example of components of "Expenditures Approach" which could decrease is cancelation and scale reduction of seasonal events. In the rest of this year 2020, Halloween is coming at the end of this month, Thanksgiving is coming in next month, and Christmas is coming in December. We usually cerebrate and enjoy these events with wearing something unique and eating something special. Also, we find many pop-up stores and many events are held in towns when such events are coming. Not only in towns, we have parties for the events in GRC campus. However, most of them will be cancelled or reduced its scale because of COVID-19 this year. Consequently, we will finish the rest of this year without spending products like we usually do. This will cause serious reduction of GDP.